The World Platinum Investment Council (WPIC) stated in a quarterly report on Wednesday that a worldwide platinum shortfall in 2023 will be worse than previously anticipated owing to high industrial demand, and that the shortage might last for years.
The WPIC predicts that demand for platinum, which is also used in car exhausts and jewellery, will increase by 24 per cent this year as some automakers replace palladium with cheaper platinum and demand for bars and coins improves.
Owing to power supply concerns and operational constraints, worldwide supply is predicted to expand only by 3 per cent in 2023, leaving the market with a shortfall of 556,000 troy ounces, up from 303,000 ounces previously expected, according to the WPIC.
“From a macro perspective, 2023 is expected to be a difficult year, with an uncertain economic environment, inflationary headwinds, and a global energy crisis. And yet, going against the grain, the platinum market is forecast to be in deficit after two consecutive years of significant surpluses,” said Trevor Raymond, CEO of the World Platinum Investment Council.
This year’s forecast deficit is unlikely to be a one-off, either, with challenges to supply expected to continue and future demand growth, supported by the needs of the hydrogen economy, likely to result in deficits continuing for a number of years, he added.
Downside risks to global supply include deteriorating electrical supply constraints in key producer South Africa and sanctions-related operational issues in Russia, according to the WPIC, which uses data from consultancy Metals Focus. The WPIC’s published numbers do not include much of China’s platinum imports, which, according to the council, have been substantially in excess of recognised need since 2021.
Due to internal export constraints, the WPIC anticipates that this metal will not leave China to re-enter Western markets and will not contribute to alleviate the global shortfall in 2023.
