Global platinum group metals autocatalyst demand to hit record levels in 2022 - report
(Kitco News) - According to Metals Focus, a growing global automotive sector has driven combined autocatalyst demand for platinum, palladium and rhodium (PGM), which rose by 5% in 2021 and expected to hit record levels in 2022.
The consultancy said that the total PGM demand is expected to grow 11% breaching 12.8Moz in 2022.
“This is 1.2Moz more than 2021 and 200koz higher than pre-pandemic levels, despite expectations that vehicle numbers will still be lower than in 2019,” the authors of the report noted.
The growth in demand will be driven by two key factors, Metals Focus said. First, automotive manufacturing is expected to improve by 12.5% y/y.
“After a period of dramatic downward revisions in car production forecasts last year, since late December 2021 we have seen vehicle production forecasts for 2022 revised upwards, albeit modestly,” the report found.
While the consequences of chip shortages are expected to linger for most of this year, the accelerated investment by chipmakers in 2021 should start to pay dividends and ease the constraints, particularly towards the end of 2022, the consultancy said.
Second, tighter emissions legislation in major markets, notably Europe, China and key emerging countries such as India, further supports the growth in PGM demand.
Turning to the individual metals, platinum will lead the charge with demand growing ahead of both rhodium and palladium.
According to the report, platinum demand is expected to grow by 20% y/y in 2022, boosted primarily by rising heavy-duty diesel loadings, predominantly in Asia.
Higher vehicle numbers and more generally tighter emissions targets will also help, as does an acceleration in substitution. With platinum still trading at a meaningful discount to palladium, Metals Focus said it continues to see the deployment of tri-metal catalyst technology, which contains an increased share of platinum.
Importantly, platinum demand in China will also be supported by tightening emissions legislation for heavy duty and offroad vehicles.
While palladium will not post the same growth as platinum this year, demand is still expected to increase by almost 650koz or 8% y/y in 2022.
The slower growth rate is partly due to palladium not receiving the same boost platinum did from rising loadings in heavy-duty applications. Furthermore, the premium to platinum has incentivized a reduction in the share of palladium in autocatalysts.
In keeping with the other two metals, the consultancy also anticipates that rhodium autocatalyst demand catching a tailwind, through increased car production, returning to all-time highs in 2022.
However, notwithstanding these positive expectations, autocatalyst demand remains vulnerable to the lingering pandemic and mutations which may introduce variants that, as seen with Delta and Omicron, could send economies back into lockdown.
Moreover, following the historically high palladium and rhodium prices, thrifting of PGMs and the trend towards non-PGM solutions may accelerate more quickly than currently anticipated, Metals Focus concluded.