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Global platinum market expected to be in deficit in 2023 on growing demand and supply constraints - report

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(Kitco News) - In its quarterly report released today, the World Platinum Investment Council (WPIC) said that the global platinum market is forecast to be in a deficit of 303 koz in 2023 as global platinum demand is expected to increase by 19% (to 7,770 koz) while supply will increase by just 2% (to 7,466 koz).

WPIC noted that supply constraints, combined with increased bar and coin demand, have seen the market surplus forecast for 2022 revised downwards by 17% (-170 koz) to 804 koz, adding that the profound swing in market balances between the 2022 surplus and the 2023 deficit is forecast to be more than 1.1 Moz.

According to the report, automotive platinum demand jumped 25% year-on-year (+143 koz) in Q3’22 on a very weak Q3'21 driven in large part by a 27% increase in light-duty vehicle production as supply-chain challenges eased.

“A combination of higher passenger vehicle production numbers, tighter emissions legislation for HDVs in China and India, as well as growing substitution of platinum for palladium will see a 12% (+329 koz) expected increase in platinum demand this year, to 2,964 koz,” the analysts said.

Importantly, WPIC pointed out that automotive demand in 2023 is expected to increase at a similar rate to 2022, up 11% (+324 koz) to 3,288 koz.

Jewellery demand for platinum in 2022 is forecast to remain unchanged year-on-year at 1,953 koz, with growth in Europe, North America, India and Japan not fully countering weakness in China, yet an improvement on the demand projected at the beginning of the year. For 2023, jewellery demand is expected to remain flat at 1,954 koz, WPIC said.

WPIC noted that 2022 is set to be the third strongest year for platinum industrial demand on record, with 2,110 koz of demand. This trend is set to continue into 2023, which is forecast to be the second strongest year for industrial demand on record, climbing 10% to 2,316 koz, with a notable increase in demand from the glass industry.

Investment demand for platinum is expected to increase significantly in 2023, the authors of the report said, as bar and coin demand is forecast to jump by 49% (+167 koz) to 507 koz, a three-year high, as manufacturers in North America and Europe allocate more capacity to platinum on weaker gold and silver demand, and net disinvestment in Japan swings to net investment.

Meanwhile, outflows from exchange warehouses (-20 koz) and liquidations of ETF holdings (-275 koz) are expected to slow, resulting in net investment of 212 koz in 2023.

Trevor Raymond, CEO of the World Platinum Investment Council, commented, “The considerable economic headwinds that have persisted throughout 2022 are expected to continue into 2023, yet the platinum market is forecast to be in deficit after two consecutive years of significant surpluses. This reflects supply that remains well below pre-pandemic 2019 levels and demand growth, despite the unfavourable economic outlook.

“Platinum’s resilience reflects growing automotive demand mainly due to increased substitution and higher loadings, and already committed industrial capacity additions. This puts platinum in a somewhat unique position versus other commodities in that demand is forecast to continue to grow, despite the recessionary outlook.”

The World Platinum Investment Council is a global market authority on physical platinum investment, formed to meet the growing investor demand for objective and reliable platinum market intelligence. WPIC’s mission is to stimulate global investor demand for physical platinum through both actionable insights and targeted product development.

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