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Platinum will register a smaller supply deficit in 2024 after a record one in 2023 due to lower consumption and higher output, the World Platinum Investment Council (WPIC), whose members are major Western platinum producers, said on Tuesday.
Demand for platinum, which is used in catalytic converters to reduce harmful emissions from vehicle exhaust systems among other applications, is expected to decline by 6% to 7.7 million troy ounces in 2024 due to reduced consumption by glassmaking and chemical sectors, the WPIC said in a quarterly report.
Yet, demand from the auto sector is expected to increase for the fourth consecutive year in 2024. Stricter emissions regulation, higher jewellery consumption and widening substitution by automakers of palladium for cheaper platinum will further support demand.
Supply, meanwhile, is expected to rise by 3% to 7.3 million ounces due to higher output in South Africa, though downside risks for both mined and recycling supply persist after this year’s decrease in the platinum group metals’ price.
That will leave the market under supplied by 353,000 ounces in 2024 compared with the record deficit of 1.07 million ounces this year, the WPIC said, adding that the platinum market is now facing consecutive deficits.
The WPIC expects availability of above-ground stocks to continue to decline with most of the stocks held in China and not readily able to be exported. At the end of 2023, the above-ground stocks will be at a three-year low, equal to five months of demand.
“The economic aftershocks of the past three years are still being felt in the platinum market and continue to affect market behaviour and prices today,” Trevor Raymond, the WPIC chief executive, said in the report. Platinum prices are down 15% so far this year.
As previously accumulated inventories in the automotive sector decline “with continued growth in vehicle production and sales, we foresee a return to more typical automaker platinum buying patterns, which could further tighten the market and place upward pressure on the platinum price,” Raymond added.
(By Polina Devitt; Editing by Sharon Singleton)
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