Platinum to remain oversupplied into 2022

STRONG supply and sluggish demand will push the platinum market into surplus for the remainder of 2021 and 2022 as a backlog of semi-finished stock boosts mine supply, the World Platinum Investment Council (WPIC) said on Wednesday.
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The WPIC now sees the global platinum market in a surplus of 769,000 ounces in 2021, with 2022 forecast to see a surplus of 637,000oz, despite rising demand from automotive, jewellery and industrial sectors.

Total mine supply is expected to reach 6.1Moz in 2021, up 25% year-on-year. Total supply, including recycling, is forecast to hit 8.1Moz in 2021, up by 19% year-on-year.

"Residual pandemic effects, such as the semiconductor shortages, will continue to inhibit platinum demand in 2021 and 2022, both of which would otherwise be far higher," said WPIC CEO Paul Wilson.

"2022 will be a crucial year in which the dust from 2020 settles and the remaining portion of the semi-processed material built up in 2020 is released."

Processing of semi-finished material built up during last year's Anglo American Platinum converter plant (ACP) shutdowns, accelerated in Q3, with the trend set to continue.

This rising supply will outweigh growing demand from the recovering global economy. Industrial demand expected to surge 26% in 2021, to 2.5Moz, before falling back to 2.2Moz in 2022, but still above pre-pandemic levels.

The growth is driven by surging demand from the petroleum and glass industries, as economic activity recovers from the COVID pandemic.

Despite the macro-led uptick in consumption, demand from the automotive sector has been restricted by a shortage in semi-conductor chips, with passenger car production expected to be just 77 million in 2021, about 10 million fewer than expected at the start of the year.

However, platinum demand from the sector is expected to be up by 14% year-on-year in 2021, at 2.7Moz, and a further 20% higher in 2022, as automakers increase the amount of platinum in their catalysts to meet tightening emissions restrictions, and substitute palladium with platinum.