Global platinum consumption to increase by 5% as demand rises

GLOBAL platinum consumption for 2019 is set to reach a 2015 high on improved investment demand, the latest quarterly report by the World Platinum Investment Council (WPIC) said yesterday as it forecast that the market would swing to a surplus.

The WPIC, a think tank formed in 2014 by six leading local platinum producers to stimulate demand, said 2019 demand for the precious metal would likely increase by 5 percent to 7.74 million ounces, citing the rejuvenation in investment demand, which had offset weaker forecast demand in automotive, jewellery and industrial segments.

The WPIC said it expected supply to rise slightly faster, largely due to the release on to the market of material accumulated by local mines during upgrades and maintenance over 2017 and 2018.

WPIC chief executive, Paul Wilson, said the organisation expected the growth trend to continue.

“We believe our ongoing efforts in product development through global partnerships, plus platinum’s discount to gold will support continued, solid retail investment in bars and coins,” Wilson said.

It forecast the largest surplus since at least 2013 this year, saying there would be an oversupply of 680 000 ounces in 2019 after a surplus of 645 000 ounces last year.

The WPIC also said it had improved its forecast for South Africa’s redefined production.

“Three factors in 2019 strengthen platinum’s investment case: possible ongoing disruption of South African mining output could reduce supply; recovering Western Europe diesel market share may increase automotive demand; also, the significant increase in the palladium price makes future demand growth for platinum as a replacement for palladium in gasoline cars more likely,” it said.

South Africa alone produces roughly 80 of the world’s Platinum Group Metals (PGMs) that include platinum, rhodium, palladium, ruthenium, osmium, and iridium and platinum are among the six metals in the PGM basket.

Platinum and palladium are used in emissions-cutting autocatalysts, with platinum used more in diesel engines. Platinum lost its shine after Volkswagen was found to have cheated emissions tests in 2015.

Platinum prices have been on a downward trend with the average price at $831 an ounce yesterday. On the contrary, since 2016, the rhodium price has shot up 300 percent while palladium is up 150 percent.

The report said automotive demand was projected to fall at a far slower rate than in 2018, declining 3 percent year-on-year to 3 million ounces in 2019, compared to a 7 percent decline in 2018.

“The smaller decline is partly attributable to a stabilisation of demand in light-duty diesel autocatalysts in India,” it said.