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Platinum market to face deficit in 2023 after two years of significant surpluses - report

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(Kitco News) - According to a recent report from the World Platinum Investment Council (WPIC), after two years of significant surpluses the platinum market is forecast to move to a material deficit in 2023.

WPIC said the change from the 776 koz surplus in 2022 to the forecast deficit of 556 koz in 2023 is over 1.3 Moz.

“This reflects total supply remaining close to the weak level in 2022, up only 3% to 7,428 koz (+201 koz), and strong demand growth of 24% to 7,985 koz (+1,534 koz),” the authors of the report found.

WPIC added that the total supply was down in both Q4’22 (-18% year-on-year to 1,739 koz) and full year 2022 (-12% to 7,227 koz), “as prevailing headwinds in both mining and recycling supply severely curtailed output.”

The council said that for 2022, total mining supply declined 11% year-on-year (-659 koz) and is forecast to remain broadly flat in 2023 (+28 koz), adding that global recycling in 2022 fell 17% year-on-year (-349 koz) on reduced availability of end-of-life vehicles and lower jewellery recycling.

“Global recycling is expected to recover by 10% in 2023 to 1,856 koz, driven by an increase in the availability of spent autocatalysts, with autocatalyst recycling forecast to recover by 12% to 1,391 koz,” it said.

As for the global platinum demand, WPIC pointed out that automotive demand for full year 2022 increased by 12% year-on-year (+311 koz), reaching 2,957 koz.

Global automotive demand is expected to increase by 10% in 2023 to 3,246 koz (+288 koz), primarily due to an increase in the manufacture of hybrid vehicles, tighter emissions legislation, as well as growing platinum for palladium substitution.

WPIC added that industrial demand for platinum is expected to be an area of stand-out strength in 2023, up 12% year-on-year to 2,505 koz (+262 koz), and just 26 koz below the level in 2021, the strongest year on record.

Furthermore, as restrictions ease, and consumer confidence returns, global jewellery demand is expected to improve by 2% (+42 koz), growing to 1,936 koz in 2023, compared to a decline of 3% (-59 koz) to 1,894 koz for full year 2022.

WPIC added that investment demand is expected to improve significantly in 2023 as platinum bar and coin demand is forecast to jump by 100% to 450 koz in 2023, a three-year high.

In conclusion, WPIC noted that the global platinum market is forecast to be in deficit in 2023 after two consecutive years of significant surpluses.

“This year’s forecast deficit is unlikely to be a one-off, either, with challenges to supply expected to continue and future demand growth, supported by the needs of the hydrogen economy, likely to result in deficits continuing for a number of years,” it said.

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