Platinum shortfall to continue as global demand soars in the face of shrinking supply

A new report is forecasting a continuing slide in platinum production as demand for the precious metal continues to surge.

The World Platinum Investment Council’s latest quarterly report found that the market for the metal is set for consecutive periods of market deficits, with an undersupply of 418,000 ounces expected in 2024 following a shortfall of 878,000oz in 2023.

Meanwhile, global platinum demand is tipped to remain robust in 2024 at a time when supply levels are forecast to fall by 1% year-on-year (YoY) to 7,089,000oz in 2024 from the near record low platinum supply levels of 2023.

Total demand surged by 25% YoY in 2023 to 8,009,000oz, whereas total supply fell to 7,131,000oz—the second-lowest figure since 2013, surpassed only by the COVID-impacted year of 2020.

Mining down, recycling up

Global platinum mine supply for 2024 is expected to decrease by 3% to 5,489,000oz after supply in 2023 recorded a 1% increase to 5,636,000oz.

On the recycling front, the report has forecast a 7% improvement to 1,600,000oz in 2024 as spent autocatalyst supply recovers and regulatory restrictions ease.

It was a very different story in 2023 when global recycling supply dropped for the third consecutive year—down 14% YoY to 1,495,000oz, some 22% below the pre-COVID five-year average.

The council said this was mainly due to a drop in spent autocatalyst recovery, driven by stricter North American anti-theft regulations and China’s restrictions on autocatalyst recycling.

Automotive demand growing

According to the council, the surge in demand for platinum is largely being driven by the automotive market.

Its report found that automotive demand will continue to rise this year after it jumped by 16% in 2023 to 3,272,000oz on the back of increasing vehicle production and a greater hybrid vehicle share.

The council found that the increase in demand also benefitted from stricter emissions standards for both light- and heavy-duty vehicles – especially in China – while platinum-for-palladium substitution reached 669,000oz in 2023, a significant rise from 391,000oz in 2022.

Industrial demand solid

While industrial demand is forecast to decline in 2024 from record high in 2023, it will still be 12% above the pre-COVID five-year average.

The 2023 increase to 2,622,000oz was driven by significant expansions in the glass (up 39% to 701,000oz) and chemical (up 13% to 771,000oz) sectors.

The council said that without the same level of capacity expansions in 2024, industrial demand will fall by 14%.

Price vs fundamentals

World Platinum Investment Council chief executive officer Trevor Raymond said the challenge for platinum investment continues with a lack of a price response to the underlying fundamentals.

“We believe this is a function of range-influenced algorithmic trading and automakers’ management of excess platinum inventories, accumulated when they underproduced more than 30 million vehicles as a result of the pandemic and the semiconductor shortage.”

“Range-bound trading will likely continue until price breaks out of that range, but we estimate that the automaker inventory management process is close to having run its course.”

While platinum prices have declined so far this year to around $1,400 at present, according to Coinpriceforecast the latest long-term forecast will see the metal hit around $1,500 by the end of 2025, $1,600 by the end of 2026 and $1,700 by the end of 2027.