The WPIC has published its Platinum Quarterly for the second quarter of 2019 together with revisions to both the full year 2019 forecast and 2018 actual.
The World Platinum Investment Council (WPIC) ’s report forecasts a substantial 9% increase in total platinum demand in 2019, owing to solid investment demand that more than offsets expected demand decreases in the automotive and jewellery segments of 4% and 5% respectively.
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The unprecedented 855 koz of investment demand in H1’19 is driven by a surge in ETF holdings, which gained 720 koz.
Total platinum supply is expected to rise by 4% this year but growth is mostly due to the refining of mined metal built up in the processing pipeline in South Africa in 2018.
Potential power disruptions and industrial action in the second half of 2019 continue to represent risks that could reduce South African mining supply.
With demand projected to increase by more than supply, the annual 2019 market balance will narrow to a surplus of 345 koz from the previously forecast surplus of 375 koz.
In Q2’19 refining of some of built-up pipeline stocks and higher autocatalyst recycling led to a surplus of 220 koz.
Following the record deficit of 590 koz in the first quarter, this left the market with a deficit of 370 koz for the first half of the year.
Although Q2’19 automotive demand was softer year-on-year by 50 koz, the rate of decline continues to ease as independent evidence emerges of exceptionally low NOx emissions from new diesel cars and their low CO2 emissions.
Diesel vehicles will have a vital role to play in the lower EU CO2 fleet emissions required for automakers to avoid heavy fines.
There has been a significant increase in news flow related to more widespread application of fuel cell electric cars and trucks as well as in non-road applications including trains.
This highlights the increased likelihood of fuel cell electric vehicles being part of a multi-drivetrain solution to achieve zero on-road emissions.
Quarterly jewellery demand slipped further year-on-year by 30 koz due to a continued decline in Chinese demand.
Q2’19 industrial demand was up slightly compared to Q2’18 as growth in demand for platinum in chemical catalysts and glass manufacturing was offset by a decline in the other industrial demand segment.
Paul Wilson, CEO of WPIC, comments:
“Today’s report shows continued investment demand growth, driven by investor recognition of platinum’s demand and price growth potential.
"This has been supported by uncertain capital markets that have seen inflows for most precious metals ETFs this year, of which platinum has been a standout beneficiary. Institutional investment demand has had an unprecedented start this year with ETF buying of 720 koz in H1’19.
"European automakers continue to highlight that lower CO2 emitting diesel vehicles have a vital role to play in meeting European fleet CO2 emissions levels.
"Along with the likely substitution of palladium by platinum in gasoline autocatalysts, this bolsters platinum’s future demand growth potential.
"We continue to develop product partnerships in two of our key target markets, China and North America.
"We are pleased to note good progress with two new partnerships in the US with A-Mark Precious Metals and Sunshine Minting Inc. and in China the engagement with Bank of China has led to the Agricultural Bank of China also using our insights to promote their platinum investment offerings. "Two new partners, Shenzhen Jin Zheng Long and Dalian Qian Hai Jin, are now producing retail platinum bars in China.
"These partnerships will further increase the number and availability of platinum investment options for investors in these regions and worldwide.”
Read the report here