In its Q1 Platinum Quarterly, the World Platinum Investment Council (WPIC) offered a revised forecast for 2023. Global platinum demand in the first quarter of 2023 jumped 28% (441,000 oz) as an upswing in investment demand added to strong demand growth momentum in the automotive and industrial sectors. Combined with lower supply of refined platinum production in the quarter of -8% year-on-year (yoy, -96,000 oz), as well as reduced autocatalyst recycling (-15%, -52,000 oz) and jewelry recycling (-3%, -3,000 oz), this led to a market deficit of 392,000 oz, the first quarterly deficit since Q2 2021.
These events have led to a meaningful upward revision of the deficit forecast for full-year 2023 to 983,000 oz, which is up by 77% versus the figure predicted three months ago. This reflects total supply which is now expected to fall 1% below the weak 2022 level to 7,193,000 oz (-63 koz), and stronger year-on-year demand growth than originally anticipated of 28% to reach 8,176,000 oz (+1,775,000 oz).
Q1 2023 saw a surge in investor interest, driven by heightened global uncertainty, platinum’s strong demand growth and concerns about risks to mine supply. Bar and coin investment jumped by 71% year-on-year in Q1’23 to 102,000 oz (+42,000 oz), its highest total since Q3 2021, propelled by a marked recovery in Japan. This trend is set to continue for the full year, with an increase of 79% (178,000 oz) forecast. Meanwhile, net platinum ETF holdings grew by 43,000 oz in Q1 2023, reversing the previous six quarters of net disinvestment. The result will mean net investment demand of 433,000 oz in 2023 – a swing of 1,073,000 oz on 2022.
Industrial demand in 2023 will be the strongest on record. Industrial platinum demand grew 8% (+43,000 oz) in Q1 2023, driven by growth in chemical demand of 108% (+123,000 oz) due to paraxylene capacity additions in China. Similarly, on a full-year basis, LCD glass capacity additions in China are expected to offset closures in Japan and result in glass demand for platinum growing by 76% year-on-year (+316,000 oz) to 730,000 oz. Together with increases from the medical sector (+3%, +9,000 oz) and other industrial segments (+4%, +23,000 oz), 2023 is on track to be a record year for industrial demand, growing by 17% yoy (+382,000 oz) to 2,628,000 oz.
Automotive demand rose 9% (+69,000 oz) to 806,000 oz in Q1 2023, partly aided by higher vehicle production, but mainly on increased platinum use per vehicle. On a full-year basis, global automotive demand is expected to rise by 12% in 2023 to 3,255,000 oz (+357,000 oz yoy), driven by a number of factors. Firstly, heavy-duty vehicle (HDV) production is forecast to grow by 6% in 2023, with output in China jumping by as much as 26%. Secondly, tighter emissions legislation, particularly in China, will result in higher loadings, especially for HDVs and non-road vehicles. Lastly, growing platinum for palladium substitution in gasoline after-treatment systems will further boost platinum consumption. Significantly, this has meant a further upward revision to the substitution estimate for 2023 to 615,000 oz.
Refined mine production declined 8% (-96,000 oz) in Q1 2023 yoy and fell 11% (-151,000 oz) against Q4 2022, as gains from Russia failed to offset reduced output from South Africa. Output in South Africa declined 14% yoy (-119,000 oz) as smelter maintenance and the impact of the country’s ongoing electricity shortages hampered output. While mined platinum supply is forecast to fall by a modest 1% (to 5,511,000 oz) in 2023, as reductions in South Africa are partially offset by gains in Zimbabwe and North America, significant uncertainties still exist for South African platinum supply.
Platinum is forecast to see a meaningful and sustained period of deficit, according to Trevor Raymond, CEO of the WPIC.
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