The platinum market is grappling with an increasingly pronounced deficit forecast for 2024, as the delicate balance between supply and demand tilts further towards scarcity. In a recent report from the World Platinum Investment Council (WPIC), projections indicate a widening deficit of 476,000 ounces for the year, a stark increase from the previous estimate of 418,000 ounces made just months earlier in March. This substantial deficit not only highlights the persistent challenges facing the platinum market but also underscores the critical need for a strategic response to address the growing imbalance.
Edward Sterck, WPIC’s director of research, emphasized the significance of this deficit, noting that it marks the second consecutive year of substantial market imbalance. Total platinum supply for 2024 is anticipated to contract by 1% to 7.11 million ounces, primarily driven by diminishing mine output. Factors contributing to this decline include ongoing restructuring efforts, mine closures, and delays in production ramp-ups, particularly in key platinum-producing regions such as South Africa and Russia. Additionally, the imposition of Russian sanctions and planned smelter maintenance further exacerbate the supply constraints, amplifying the challenge of meeting global demand.
Conversely, demand for platinum is projected to decrease by 5% in 2024 to 7.59 million ounces, although it remains elevated compared to historical averages. While certain sectors, such as automotive and jewelry, are expected to drive demand growth, weaker investment and industrial demand are anticipated to offset some of these gains. Sterck emphasized the resilience of demand, highlighting the potential for accelerated growth in the automotive industry to further deplete above-ground platinum stocks.
The decline in recycling rates observed in 2023 is expected to reverse course, with a projected 5% improvement to 1.64 million ounces in 2024. This rebound is attributed to the gradual recovery of spent autocatalyst supplies and a resurgence in Chinese jewelry demand. However, recycling rates continue to lag significantly behind historical norms, primarily due to shortages of scrap jewelry and end-of-life vehicles, compounded by stringent regulatory measures in key markets.
On the demand side, platinum demand in the automotive sector surged to 832,000 ounces in the first quarter of 2024, buoyed by increased vehicle production and the growing market penetration of hybrid vehicles. Despite the ongoing transition to electric vehicles, platinum demand in the automotive sector is expected to exhibit modest growth of 2% to 3.27 million ounces for the full year. This growth trajectory underscores consumer acceptance of hybrid vehicles, contributing to sustained demand for platinum in the automotive industry.
Industrial demand, which reached a record high in 2023, is forecasted to moderate to 2.24 million ounces in 2024, albeit remaining substantially above pre-pandemic levels. This moderation reflects a recalibration of industrial activities following the pandemic-induced disruptions, while still underscoring the indispensable role of platinum in various industrial applications.
In conclusion, the platinum market is navigating a complex landscape characterized by supply constraints, evolving demand dynamics, and uncertainties surrounding market recovery and the future adoption of electric vehicles. However, despite these challenges, the WPIC report underscores the enduring value proposition of platinum in the global economy, highlighting its indispensable role across automotive and industrial sectors. As stakeholders seek to navigate the evolving market dynamics, strategic interventions will be essential to address supply shortages, foster demand growth, and ensure the long-term sustainability of the platinum market.
