The World Platinum Investment Council (WPIC) said the global platinum supply gap in 2024 will be larger than previously expected as low palladium and rhodium prices cause mines to cut production, adding that mine supply could fall further.
The shortfall of 418,000 ounces in 2024 will be smaller than the 878,000 ounces in 2023 due to falling demand, WPIC said in a quarterly report on Wednesday.WPIC's members are the major Western platinum producers.
The body had previously forecast a shortfall of 353,000 ounces in 2024.
Platinum is used in catalytic converters to reduce harmful emissions from vehicle exhaust systems, among other applications. Demand for platinum is expected to fall 6 per cent to 7.557 million ounces this year as industrial demand weakens after a record year in 2023.
However, WPIC added, using data from consultancy Metals Focus, that demand from the automotive sector will grow by 1 per cent as platinum continues to be replaced by palladium.
Meanwhile, total supply will fall by 1 per cent to 7.089 million ounces, as a 3 per cent reduction in mine supply (mainly from South Africa and Russia) will be partly offset by 7 per cent recycling.
To make up the shortfall, aboveground stocks will fall by 10 per cent, following an 18 per cent decline in 2023 to a four-year low of 3.581 million ounces, the agency added.
The 11 per cent fall in platinum prices so far this year, following an 8 per cent drop in 2023, was seen by WPIC as a result of algorithmic trading and automakers managing increased platinum inventories, which built up during the outbreak, as well as a shortage of semiconductors in 2020-2022.
WPIC CEO Trevor Raymond said in the report, "Range-bound volatility is likely to continue until prices break out of the range, but we estimate that the process of inventory management by automakers is nearing its end."
