WPIC switches 2021 platinum forecast from deficit to surplus

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LONDON — The World Platinum Investment

Council (WPIC) said on Thursday it now expects the global

platinum market to be in surplus this year as mine supply ramps

up and investment demand falls.

The roughly 8 million ounce a year market will be

oversupplied by 190,000 ounces in 2021, the WPIC said.

In its last quarterly report in May, it predicted a

shortfall of 158,000 ounces, which would have been the third

consecutive year of undersupply.

Platinum is used by auto makers, who embed it in vehicle

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exhausts to reduce emissions, in other industry such as glass

making and for jewelry and investment.

Prices rose to a 6-1/2 year high of $1,336.50 an

ounce in February but have since sagged to around $1,000.

Last year, the coronavirus pandemic sharply reduced platinum

supply. Demand from industry and jewelers also fell but

investors bought huge amounts and almost half a million ounces

flooded into exchange vaults in New York, pushing the market

into deficit, the WPIC said.

Demand from industry has rebounded and a boom in heavy duty

vehicle production and tighter emissions standards are pushing

up consumption by the auto sector, it said.

But jewelry sales remain weak, investment demand, while

strong, has slowed, and metal has stopped flowing to New York.

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Supply, meanwhile, has rebounded faster than expected thanks

to rapid processing of a backlog of material created by plant

outages in 2020, the WPIC said.

The platinum market was in surplus in the second quarter,

the first quarterly surplus since January-March 2020, the WPIC

said.

However, mine supply is expected to flatline in the coming

years and demand should rise as auto makers use more platinum in

exhaust systems to replace palladium, whose price has

rocketed, said Trevor Raymond, the WPIC’s director of research.

“The next few years are far more likely to be deficits than

surpluses,” he said.

Following are supply and demand numbers and comparisons.

ANNUAL PLATINUM SUPPLY/DEMAND (‘000 oz)*

2020 2021f % change

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SUPPLY

Mining supply 4,906 6,007 22%

Recycling 1,905 1,936 2%

TOTAL SUPPLY 6,811 7,943 17%

DEMAND

Automotive 2,366 2,895 22%

Jewellery 1,820 1,889 4%

Industrial 1,955 2,448 25%

… of which Chemical 585 665 14%

… Petroleum 109 179 65%

… Electrical 130 134 3%

… Glass 391 658 69%

… Medical 238 246 3%

… Other 502 565 13%

Investment 1,554 521 -66%

… of which bars, coins 586 361 -38%

… change in ETF holdings 509 110 -78%

… change in stocks held by 458 50 -89%

exchanges

TOTAL DEMAND 7,694 7,753 1%

Balance -883 190 -122%

Above Ground Stocks 2,667 2,857 7%

QUARTERLY PLATINUM SUPPLY/DEMAND (‘000 oz)*

Q2 2020 Q1 2021 Q2 2021

SUPPLY

Total Mining Supply 967 1,442 1,591

Recycling 368 493 477

TOTAL SUPPLY 1,335 1,935 2,068

DEMAND

Automotive 379 715 664

Jewellery 388 477 461

Industrial 403 679 591

… of which Chemical 112 119 204

… Petroleum 18 35 40

… Electrical 29 33 35

… Glass 80 286 112

… Medical 60 62 59

… Other 104 143 141

Investment 385 157 191

… of which bars, coins 123 18 111

… change in ETF holdings 123 106 31

… change in stocks held by 138 33 49

exchanges

TOTAL DEMAND 1,555 2,028 1,907

Balance -221 -93 161

* Source: World Platinum Investment Council, Platinum

Quarterly Q2 2021

(Reporting by Peter Hobson

Editing by Chizu Nomiyama)

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