(Kitco News) - The platinum market should move closer to balance in 2022, according to Johnson Matthey's latest PGM Market Report.
The company released its Platinum Group Metals forecast today.
Johnson Matthey wrote that platinum demand growth will be driven by rising consumption in catalysts for heavy-duty trucks and increased use of platinum (in place of palladium) in gasoline autocatalysts.
"South African platinum supplies will contract by 9%, with plant maintenance at the country's two largest PGM refiners and mining activity hit by operational challenges. Industrial demand will remain robust, although it will retreat from the record levels seen in 2021 when Chinese glass companies purchased unusually large quantities of platinum," wrote the report's authors.
"Johnson Matthey's report shows that the palladium and rhodium markets could move back into deficit in 2022, with lower South African supplies and downside risks to Russian shipments. Demand growth will be constrained by weak vehicle output, and cost-saving programmes by auto and industrial consumers."
Prices for both metals remained strong during the first four months of 2022, with palladium climbing to an all-time high of over $3,300 in March as supply concerns intensified, wrote Johnson Matthey.
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Johnson Matthey warns that high PGM prices have triggered significant thrifting by Chinese automakers. For example, there is the increased substitution of palladium with platinum in gasoline autocatalysts, and reductions in rhodium use by glass companies.
Rupen Raithatha, Market Research Director at Johnson Matthey, warned that demand will continue to weaken.
"We expect weak car output to moderate PGM demand growth in 2022. In recent months we've seen repeated cuts to vehicle production forecasts, due to semiconductor shortages and supply chain disruption," said Raithatha. "There could be further downgrades to come, especially in China, where Covid disruption led to stoppages at some car plants during April. However, PGM supplies are also under pressure, with Russian shipments facing logistical and commercial hurdles, and South African mines losing production due to extreme weather, electricity shortages, safety stoppages, and intermittent labour disruption."
