Peter Hobson

LONDON, (Reuters) – The world’s platinum market is severely oversupplied by 2021 according to the World Platinum Investment Council (WPIC), which said Wednesday that it expected another huge surplus this year.

To neutralise the exhaust gases from cars and other industries, such as jewellery making and investment, platinum is often used in conjunction with palladium or rhodium.

Trevor Raymond, head of research at WPIC, stated, “We have the largest surplus that we’ve ever registered, but the market remains quite tight.”

Raymond indicated that automakers could switch quickly to lower-priced platinum in order to cut costs and increase demand if there is a significant rise in palladium values.

Russia is responsible for 25%-30% of world’s global palladium supplies and 7-10% in its platinum.

Palladium prices have risen to record levels above $3,000 per ounce due to uncertainty over Russian exports. The platinum prices are now at $1,170 per ounce.

WPIC stated that the market for 8 million ounces a year was already oversupplied with 1.23 million of these ounces by 2021. They also predicted an increase in demand to 652,000 ounces by 2022.

The report said that platinum demand was down 9% and supply increased by 21%.

According to the WPIC, however, large amounts of platinum were imported into China by speculators, who profited from relatively low prices. This wiped out the surplus on the Chinese market for 2021.

According to the council, platinum supplies should drop by 1% in 2022 because of a shortage in semi-processed materials in South Africa.

The company stated that it anticipated demand rising by 7% in 2022. This is despite a drop in investments last year and a steep fall in the number of purchases made by jewellers.

The council stated that China had higher levels of heavy-duty vehicles with platinum and substituted palladium for it, which helped to boost demand despite a lower output of cars.

Below are comparisons and numbers for supply and demand.

ANNUAL PLATINUM SUPPLY/DEMAND (‘000 oz)*

2020 2021 2022f 2021/ 2022f

2020 /2021

% %

SUPPLY

Miner Supply 4906 62558 6,119 28%

Recycling 1,926 1,984 263 3%, 4%

Total Supply 6,832 8242 8,182 2,1%

DEMAND

Auto 2,370, 2,621 and 3,129 21% 19%

Jewellery 1,820 1,915 1940 5%-1%

Industrial 1,982 2,519 2,132 27% -15%

– Of which chemical 596 684 6332 15%

Petroleum 109 182 194 6%

– Electric 130 135 135 4.4%

– Glass 407 331 75% 54%

– Medical 239 251 51% 1%

500 Other 555 588 11% 6

Investment 1,546-43 329 N/A

Bars and Coins 578 332 429 29%

ETF Holdings 509 -237 50 N/A/A

– Stocks Exchange 458 -139-150 N/A/A

Total Demand 7,718 7,010 7,530, -9% 7

Balance -886 1,232 6552 N/A

Above Ground Stocks 2,677 3,908 4,560 46% 17%

QUARTERLY PLATINUM SUPPLY/DEMAND (‘000 oz)*

Q4 2020 Q3 2021 Q4 2021 Q4/Q3 Q4/Q4

% %

SUPPLY

Total Mining Supply 1,565 1,252 1,674 34%

Recycle 573 463 461 at 0%-20%

Total Supply 1,825 2,027 2,135 5.5% 17%

DEMAND

Automotive 712 582 656 13%-8%

Jewellery 529-481 497 3%-6%

Industrial 525 596 615 3% 17%

– Which chemical is it? 178 156 27% 12%

Petroleum 36 54 18% 51%

Electric 36 34 32 -9% -11%

– Glass 73, 164 121 26% 66%

– Medical 60 64 661 -4% 3%

– Other 143 132 147 12% 33%

Investment 135-282-108 -62%-180%

– Coins, bars 60 110 95 -14% 58%

ETF Holdings: 76 219 -155 29% -303%

– Exchange stocks -1-173 -48 72% 5414%

Total Demand 1,901 1,377 1,660 21%-13%

Balance -76 65 475 -27%-723%

* Source: World Platinum Investment Council, Platinum Quarterly Q4 2021