Platinum market heading for biggest surplus in years, says World Platinum Investment Council
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The global platinum market would see a much larger surplus this year than it previously forecast and another big oversupply next year, the World Platinum Investment Council (WPIC) said yesterday.
Platinum is used by automakers to neutralise harmful engine emissions and by jewellers, industries such as glassmakers and for investment. Surpluses imply lower prices and deficits higher prices.
The WPIC said the roughly 8 million tonne a year platinum market would be oversupplied by 769 000 ounces this year – the most since its data begins in 2013 – and 637 000 ounces next year.
In September, it predicted a surplus of 190 000 ounces this year. In May, it forecast a deficit.
In the third quarter of this year alone, the platinum market was oversupplied by 592 000 ounces, the biggest quarterly surplus since at least 2013.
The roughly 8 million ounce a year global platinum market has moved back into surplus this year.
Supply from South Africa had increased as inventory that built up during a smelter outage was processed faster than expected, the WPIC said.
Meanwhile, demand from automakers fell as a chip shortage forced them to cut production and stockpiles held in exchange vaults in New York and for investors in exchange traded funds (ETFs) shrank.
Investment demand has fallen from 2019 and last year but demand from automakers and industry has grown.
The WPIC predicted platinum supply would remain high next year, but its head of research Trevor Raymond said production of the metal should fall next year or in 2023 after the built-up inventories in South Africa were spent.
The WPIC said that next year it expected demand from automakers and investors in platinum bars and coins to rise, but for industry, ETFs and jewellers to want less platinum.
Platinum prices rose to a six- and a- half year high of $1336.50 (R21 228) an ounce in February, but have since sagged to around $1 000.