Platinum Demand Forecasted to Increase 9% in 2019
The World Platinum Investment Council (WPIC) has published its Platinum Quarterly for the second quarter of 2019 giving insights on current market trends and an update on the full year 2019 forecast and 2018 actual. The WPIC forecasts a substantial 9% increase in total platinum demand in 2019. Increased and solid investment demand has led and will continue to lead this higher demand as opposed to an expected decrease in the automotive and jewellery segments of 4% and 5% respectively.
The remarkable 855 koz of investment demand in the first half of 2019 is driven by a surge in ETF holdings, which gained 720 koz whilst the remainder was attributable to a modest increase in bar and coin demand at 135 koz.
It is expected that total platinum supply is to rise by about 4% this year. Growth is however mostly due to the refining of metal built up in the processing pipeline in South Africa in 2018. South African mining supply may be dampened by the continued potential of power disruptions and industrial action during the second half of 2019.
We are expecting to see a stronger demand over supply. The annual 2019 market balance will narrow to a surplus of 345 koz as opposed to the forecasted 375 koz surplus, according to WPIC.
In the second quarter of 2019 refining of some of the built-up pipeline stocks and higher autocatalyst recycling led to a surplus of 220 koz.
Despite the softer year-on-year automotive demand by 50 koz, the rate of decline is easing as new evidence is emerging on the positive application of platinum in reducing NOx emissions from new diesel cars and their lower CO2 emissions. Diesel vehicles will have a vital role to play in the lower EU CO2 emissions required for car manufacturers to avoid heavy fines. News continue to spread on a more widespread application of fuel cell electric cars and truck as well as in non-road means of transportation such as trains. This highlights the increased trend of fuel cell electric vehicles being part of a multi-drivetrain to achieve zero on-road emissions
Quarterly jewellery dropped even further year-on-year by 30koz which is mainly attributable to a continued decline in Chinese demand.
Industrial demand was slightly higher year-on-year compared to 2Q 2018 as a result from the increased requirement for platinum in chemical catalysts and glass manufacturing. This marginally outweighed a decline in other industrial end-uses.
Comments by Paul Wilson, CEO of WPIC:
“In 2019 we expect platinum to benefit further from the growing pool of investors considering precious metals. The growth in global debt attracting negative interest rates has added to the long-standing attraction of precious metals to diversify equity investments.”
“Our partnerships have increased the availability of retail platinum investment products with new products and partners enhancing likelihood of higher retail investment demand.”
“To avoid massive fleet CO2 fines automakers are expected to promote diesel cars, something they have avoided since 2015, and is likely to increase diesel sales and platinum demand.”
“Platinum’s demand growth from fuel cells will be driven in the near term by heavy duty applications.”
“The heightened global prominence of addressing climate change has elevated the importance of reducing CO2 emissions from vehicles; making clean diesel and fuel cell electric vehicles more likely to provide short- and medium-term solutions in this regard. The surge in global debt with negative yields has increased the attractiveness of precious metals, including platinum, and has built on platinum’s demand growth potential to significantly enhance platinum’s investment case.”
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