The World Platinum Investment Council (WPIC) has revised its forecast for a more profound global platinum deficit in 2024, attributing the shortfall to supply reductions resulting from subdued prices of palladium and rhodium across mining operations. The council highlighted the potential for additional declines in mine supplies, underscoring the evolving dynamics within the platinum market.
While the projected deficit of 418,000 troy ounces in 2024 is a reduction from the previous year’s 878,000 ounces, the WPIC emphasized that risks exist for further declines in mine supplies, indicating a challenging landscape for platinum production in the current market environment.
Anticipating a 6% decrease in demand to 7.507 million ounces this year, primarily driven by weakened industrial demand post a record-setting 2023, the council noted a contrasting uptick of 1% in demand from the automotive sector. This surge is fueled by the ongoing substitution of platinum for palladium, a trend expected to persist.
Total supply is projected to experience a marginal 1% dip to 7.089 million ounces, with a notable 3% reduction in mine supply from key regions like South Africa and Russia. However, this decline is partially offset by a 7% recovery in recycling efforts, offering some relief amidst supply constraints.
To mitigate the deficit, above-ground stocks are anticipated to decrease by 10%, following an 18% reduction in 2023 to reach a four-year low of 3.581 million ounces. The council’s insights shed light on the delicate balance between supply and demand dynamics within the platinum market.
Platinum prices have seen an 11% decline year-to-date, following an 8% decrease in 2023. The WPIC attributes this trend to algorithmic trading patterns and strategic inventory management practices by automakers, who have been adjusting their platinum holdings accumulated during the pandemic and semiconductor shortages of 2020-2022.
WPIC’s Chief Executive, Trevor Raymond, expressed expectations of continued range-bound trading until a breakout occurs, noting that automaker inventory adjustments are nearing completion. The evolving market conditions underscore the complexities at play within the platinum sector, shaping the trajectory of supply, demand, and pricing dynamics moving forward.