Page 29 - Bullion World Issue 3 July 2021

Bullion World | Issue 03 | July 2021

Constrained Supply despite high Higher Chinese platinum auto demand
basket price – recovery from 2020 but means more pt price-supportive spot
still below 2019 levels buying

The best time to buy a
CombiBarTM was 10 years ago.

The second best time is now.

Mine supply projections flat for next 3-4 years despite record • Many Chinese OEMs do not run forward hedge books like
basket prices Western OEMs
• Chinese spot purchases a key factor in driving the 2020
Recycle supply inelastic and constrained by refining capacity palladium price rally
and higher working capital • Automaker spot buying in China already supporting
platinum prices in $1,100-$1,200/oz range
Source: Johnson Matthey (1977-2013), SFA Oxford (2014-2018)
Metals Focus (2019 onwards), Bloomberg, WPIC Research
Source: China Customs, Bloomberg, CFTC, WPIC Research
Note: CTFC Managed money positioning as of 4th May 2021
If you go back to 2019 and before that, there is a short-term
change in the palladium price were very much driven by the The price of Palladium was flat in 2017 aroungd 1,000$ to
markets. Before the pandemic, the grey area, the long positions 1,200$/oz. It’s a one-to-one substitute in catalyst. And on the
came down heavily due to price increase. Equally when we right,the makers have been talking about vehicles which are on
saw prices of palladium collapse along with everything else, the road, whether catalyst contains Palladium and you want to
there came not much activity in the futures market. The reason replace it with Platinium. Its quite a slow process as you can see
behind this is the automakers in China don’t have forward the blue bar grows over time but this is a material growth. In the
books for their joint ventures; they buy from the spot markets coming years we expect the grey bar to increase.
for their immediate use. As we see there are hardly any
changes in the futures palladium, yet the price was extremely
strong. In China, we see an increase in usage of Platinum in
heavy duty trucks and substitution for Palladium and as well as
strong industrial expansion since platinum being imported to
China. But the same thing is happening with the decrease in
futures positioning even though there is a strong price.

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