Page 24 - Bullion World Issue 3 July 2021

Bullion World | Issue 03 | July 2021
Mr. Trevor Raymond, • Mine supply and recycling recover well but still below pre-
Director of Research, WPIC pandemic levels
- Platinum • Automotive and Industrial recover to above pre-pandemic
levels
• Investment demand is below 2020’s record but still strong
Would you like to trim the exposure in PM? Platinum is basically
and above the 5-year average
a precious metal as well as industrial metal. That is one of
the reasons that people holding gold did switch some gold
to platinum. If you look at the previous global financial crisis, What are the consequences of the complicated year of 2020?
Platinum outperformed Gold. There is an underlying value We have four consecutive quarterly deficit pushing platinum
of platinum because of its industrial usage. Platinum has a prices from 800$ to 1200$ in 2020. There is three consecutive
balance and is easier to understand because of its industrial deficits in 2021.
application. Gold investment demand is 6%, while platinum Source: WPIC Platinum Quarterly Q1 2021, Metals Focus
demand is around 15%.
Sustained consecutive platinum
World platinum investment council deficits -
(WPIC) Launched in November 2014 4th quarterly and 3rd annual shortfalls

Platinum is 8 million ounces market annually. We see from
the chart that supply in 2020 fell below 7 million ounces due
to covid affecting the mining operations in South Africa. In
2021, we expect mine production to recover, but till now we
have seen a small recovery may be because of high price of
palladium and rhodium and working capital in that area and
some constraints in refining. Covid has affected jewellery sales
and industrial activity was down in 2020. We can see a strong
recovery in 2021 which is higher than pre-pandemic levels.

2021: total platinum supply up 16%
(+1,083 koz) total demand up 5%
(+378 koz)

• Market deficits driven by constrained supply, recovery in
industrial, growth in automotive and investment
• Risk of larger deficits from higher auto-loadings, much
more Pt-Pd substitution & increased investment demand

Source: Johnson Matthey (1977-2013), SFA Oxford
(2014-2018) Metals Focus (2019 onwards), Bloomberg, WPIC
Research

The supply is particularly constrained. About 72% of global
platinum mine supply is from South Africa. The red line is the
basket price of platinum, palladium and rhodium. Here we
see a significant increase from 2018. The mining companies
are making extremely good money. The companies are now
looking for expansion, looking for projects and so on.

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