Investors push platinum into deficit, but surplus will return- WPIC
By Peter Hobson LONDON, Nov 21
(Reuters) - A surge in investment buying will push the global platinum market into a small deficit this year – the first since 2016 – but a hefty surplus will return in 2020, the World Platinum Investment Council (WPIC) said on Thursday.
Investors betting that prices of platinum will rise from close to 10-year lows will buy 1.2 million ounces this year, up from just 15,000 ounces in 2018, the WPIC said in its latest quarterly report. That will more than offset decreases in platinum use in jewellery, auto manufacturing and other industries, pushing the roughly eight-million ounce a year market to a shortfall of 30,000 ounces, it said.
However, the WPIC forecast that investor purchases would dip to 525,000 ounces next year, and this along with further declines in auto and jewellery consumption will create a surplus of 670,000 ounces. Nearly two-fifths of platinum is used in vehicle exhausts, mainly for diesel engines, to reduce harmful emissions.
But a decline in diesel vehicle sales since a Volkswagen emissions scandal in 2015 has sapped demand. This helped push platinum prices to a low of $751.25 an ounce last year -- around half its value in 2014 -- before a recovery to around $900.
Diesel's market share has now stabilized and platinum has become cheap compared to palladium and rhodium , which are also used to curb vehicle emissions. As a result, some investors believe demand from the auto industry will rise, pulling prices higher.
The WPIC is funded by mining companies but uses data from SFA Oxford, an independent consultancy. It said its figures did not include any assumption of higher diesel vehicle sales or a switch by auto makers to platinum from other metals.
PLATINUM SUPPLY/DEMAND ('000 oz)*
2020(f) 2019 % change
Mine supply 6,110 6,205 -2%
Recycling 2,000 1,990 1%
TOTAL SUPPLY 8,110 8,195 -1%
Automotive demand 2,860 2,960 -3% Jewellery demand 2,110 2,160 -2% Industrial demand 1,945 1,905 2% Investment 525 1,200 -56% TOTAL DEMAND 7,440 8,225 -10%
Balance 670 -30 -2333% Above-ground 3,025 3,695 -18% stocks
Q3 2019 Q3 2018 % change
Mine supply 1,460 1,645 -11%
Recycling 500 490 2%
TOTAL SUPPLY 1,960 2,135 -8%
Automotive demand 695 715 -3% Jewellery demand 545 565 -4% Industrial demand 465 470 -1% Investment 230 65 254% TOTAL DEMAND 1,935 1,815 7%
Balance 25 320 -92%
* Source: World Platinum Investment Council, Platinum Quarterly Q3 2019
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ Platinum supply-demand balance ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^> (Reporting by Peter Hobson; editing by David Evans)