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The new crown, diesel vehicles and platinum and palladium replacement will improve the prospects of the platinum market.
Jul 9,2020 10:49CST
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A series of infrastructure projects related to electric vehicles have stalled due to the greater-than-expected impact of the new crown epidemic. Platinum demand for light diesel hybrid vehicles is rising to meet emission reduction regulations. The trend of replacing expensive palladium with cheaper platinum appears to be becoming a reality, while delays in the resumption of work on the platinum production chain of Anglo American (Anglo American), the main platinum producer, have cast a shadow over the supply of platinum.

As pure electric vehicles can not be mass-produced on a large scale, hybrid diesel vehicles have been paid more and more attention. With the help of platinum, the car emits 35% less carbon dioxide than conventional gasoline engines.

"there are already a lot of mature diesel hybrid models on sale in Europe. We think sales of these models will increase, which will increase the demand for platinum. At present, it is difficult to judge the future development trend of the new crown virus, but something interesting is happening. " Mining Weekly learned from the authorities.

At first, platinum was used in gasoline engines, and palladium was much cheaper than platinum, so in the 1990s, automakers succeeded in replacing platinum by using palladium in the catalysis of gasoline cars.

When the gasoline engine is working, the high temperature makes sulfur combined with oxygen and discharged from the engine, while in the lower temperature diesel engine, sulfur can not be treated well, thus reducing the catalytic efficiency of palladium.

Mining Weekly pointed out: "in essence, all diesel vehicles use platinum as a catalyst, while gasoline cars use palladium as a catalyst." Of course, if diesel cars become the darling of the market, we expect the demand for platinum to be even higher. "

However, as Zhuang Xin Wanfeng said, platinum will replace palladium in some gasoline cars.

"there are two things going on right now, which must be very good for platinum. First, the price of palladium is still 1000 US dollars / ounce higher than that of platinum, and second, the substitute ratio is 1:1. "

More supply restrictions

This is a sign of growing supply constraints, leading to massive hoarding of platinum in China, similar to what it did during the global financial crisis in 2008 and before a lengthy strike in South Africa in 2014.

All we know is that Chinese industrial users and jewelry users are doing two things. First, they will buy when they are worried about supply shortages and second, when the price of platinum goes down, "Trevor Raymond, head of (WPIC) research at the World Platinum Investment Association, said in an interview with Mining Weekly last month.

Amplats revealed that once more information is available, it will be disclosed to the market in a timely manner, which is expected to be early next week.

Amplats said in an earlier release that all orders for the long order project in Phase A had been completed and the demolition work had begun.

WPIC said this week that since the platinum group metal (PGMs) was widely used in the field of catalysts in the 1970s, one feature of platinum group metals is that one metal can be used instead of another.

The catalytic efficiency of each metal is affected by engine temperature, fuel type, fuel quality and the durability of platinum group metal coatings or "coatings" used to make automotive catalysts.

In the first decade of the 21st ji, the sulfur content of the fuel decreased. Gasoline dropped sharply from 400ppm to below 100ppm. The reduction of sulfur content affects the application mode of platinum group metals in automotive catalysts from two aspects. First, in gasoline car catalysts, palladium no longer needs to be twice as much as platinum, which means the "substitution ratio" between the two metals has fallen from 2:1 to 1:1. Second, reducing the sulfur content of diesel means that part of palladium can be used in diesel vehicle catalysts.

Demand, supply and related cost fluctuations are all affecting the use of platinum group metals. For example, the price of palladium soared in 2000, when more palladium was used on vehicles than actually mined each year, leading to the replacement of platinum and palladium.

Based on WPIC data, we believe that the high price of palladium, sustained demand growth and limited supply increase will drive up the price of platinum, as platinum can partially replace palladium in gasoline cars.

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