Platinum’s surplus is “fragile” amid supply risks and growing demand, according to the World Platinum Investment Council.
“Supply is fairly constrained and you will not see supply from mines growing in the near or medium-term future,” CEO Paul Wilson said at a precious metals conference in Singapore on Tuesday. “What we see in terms of demand growth is really quite exciting. We believe the market is at a turning point.”
Platinum is increasingly being used in catalytic for gasoline-powered cars instead of predominantly in diesel vehicles as previously, substituting palladium which is trading at a premium, said Wilson. There will also be a considerable boost in demand from the hydrogen economy, he added.
About 10% of global production is from Russia and that supply is “somewhat at risk” as its unclear how it will flow to markets in future, added Wilson. The hazards associated with the Russia-Ukraine situation could mop up the surplus forecast by the council this year, he added.
Citing expected lower output from South Africa and Russia, the council last month cut its surplus outlook for 2022 to 627,000 ounces in May from 652,000 ounces earlier this year, and its supply forecast to 7.78 million ounces from 8.18 million ounces.
Lease rates peaked at about 10% in May, implying some short-term difficulties in getting supply, said Wilson. Spot platinum traded at about $1.012 ounce on Tuesday, and is up about 4.5% this year.