First quarter of 2021: global economic recovery drives demand growth, platinum market enters third year shortage

Preface

This issue of Platinum Quarterly analyzes the changes in supply and demand of the platinum market in the first quarter of 2021 and modifies the forecast for 2021. In addition, from an investment perspective, we provide our views on relevant issues and market trends that investors are concerned about, and update the progress of our product cooperation projects and how to continue to meet the needs of investors. This issue of the Platinum Quarterly report and data (starting on page 7) is provided independently by Metal focus for WPIC.

Platinum demand in the first quarter of 2021 continued the unusually positive growth trend of the previous two quarters as global vaccination programmes and government stimulus measures continued to drive the pace of economic recovery. As the mine has resumed full operation under epidemic protection measures, and the Anglo-American platinum converter plant has also fully resumed work in this quarter, supply has also shown a strong recovery. However, the strong recovery in demand from all end-use industries, including investment, led to four consecutive quarterly shortages of platinum in the first quarter of this year, reaching-19000 ounces. The platinum market is expected to experience shortages for the third consecutive year in 2021, with a shortfall of-158000 ounces, slightly higher than previously expected.

Platinum supply and demand-- Forecast revision in 2021

We predict that total platinum supply in 2021 will increase by 16% year-on-year to 7.883 million ounces. But that figure will still be lower than it was before the 2019 outbreak, while total platinum demand is expected to grow 5 per cent year-on-year to 8.041 million ounces. As a result, it is expected that there will be a shortage in the platinum market for the third year in a row in 2021, and the gap is expected to widen from our previous forecast of-60, 000 ounces to-158000 ounces.

The updated total platinum supply in 2021 is expected to be 16 per cent higher than in 2020, as refining production is expected to return to 20 per cent (+ 988koz), but recycled supplies will increase by only 3 per cent (+ 64000 ounces).

Total platinum demand in 2021 is expected to grow by 5 per cent (+ 378000 ounces) from 2020, thanks to increased demand in automobiles (+ 557000 ounces), jewelry (+ 158000 ounces) and industry (+ 486000 ounces). Offset the decline in demand in the investment sector (- 823000 ounces). Although total investment demand in 2021 is expected to be about 53 per cent lower than the record level in 2020, demand for platinum bars, coins and ETF is expected to remain strong at 436000 ounces and 250000 ounces, respectively. The accelerated recovery of the global economy from the negative impact of the novel coronavirus epidemic in 2020, coupled with a convincing outlook for platinum demand, will provide a strong incentive for investors to continue to increase their platinum investment. The economy has accelerated its recovery from the novel coronavirus epidemic, with a shortage of-19000 ounces in the first quarter of 2021. Supply in the first quarter of 2021 was 7 per cent higher than in the same quarter in 2020. The Anglo-American platinum converter plant, which resumed operation in early December 2020, returned to full capacity in the first quarter of this year, while platinum mines in South Africa did not stop production as a result of epidemic prevention measures in the first quarter of 2020. Norilsk Nickel reduced production due to mine flooding, but this loss was largely offset by the commissioning of new processing plants and the one-time release of platinum from pipeline stocks. Recycled supplies rose 18% in the first quarter from a year earlier, mainly because prices pushed an increase in jewelry recycling.

As demand continued to recover in all end-use areas, demand rose 26% (+ 405000 oz) to 1.969 million oz in the first quarter from a year earlier. Demand for platinum rose 44 per cent in industry, 8 per cent in cars and 22 per cent in jewelry, thanks to government stimulus measures and pent-up demand as blockades continued to be relaxed in many economies. In fact, growing confidence in the sustainability of the global recovery boosted platinum investment demand in the first quarter, mainly due to ETF demand in North America and Europe, which grew 96 per cent (+ 69000 ounces) year-on-year. Supply in 2021-after the restart of the Anglo-American platinum converter plant, the mine supply increased, and the epidemic did not cause the output loss of mine operation. Total platinum supply in 2021 is expected to increase by 16 per cent over 2020 to 7.883 million ounces, including a 20 per cent increase in refining production (+ 988000 ounces) and a 3 per cent increase in recycled supply (+ 64000 ounces). Because the mine resumed full operation after the mine was suspended due to the epidemic in 2020, South Africa's supply is expected to account for the vast majority of the recovery of refining production, while the Anglo-American platinum converter plant Phase A unit will resume full operation by the end of December 2020. Russian supply is expected to fall by 12% (- 82000 oz) in the second and third quarters of this year due to the combined impact of mineral processing plant shutdowns and mine permeability. Contrary to the recovery in refined supply, production is limited by bottlenecks in automotive catalyst processing capacity and financing difficulties caused by inventories of high-value materials, with recycled supplies expected to increase by only 3 per cent (64000 ounces) compared with 2020.

Demand in 2021-strong demand in the automotive and industrial sectors combined with a recovery in the jewelry market offset the decline in investment demand

Demand is expected to grow by 5 per cent (+ 378000 ounces) in 2021, thanks to strong growth in demand in the automotive and industrial end-use sectors and a recovery in demand in jewellery, offsetting the decline in investor demand (although still strong). Investment demand is expected to be 726000 ounces in 2021, down from a record 1.5 million ounces in 2020, mainly because metal inflows into exchange inventories are expected to return to normal levels this year. However, as investors continue to be attracted by the positive demand potential for platinum, including the increase in the amount of platinum used in catalysts driven by emission regulations in the short to medium term, the replacement of platinum and palladium in catalysts, and the long-term prospects for a hydrogen economy, demand for platinum bars and coins is expected to be 436000 ounces and ETF demand is 250000 ounces. Investment demand is expected to remain strong.

Demand in the automotive sector is expected to increase by 24 per cent (+ 557000 ounces) from 2020 levels in 2021, mainly because global production of light and heavy vehicles is expected to rise 16 per cent and 3 per cent respectively over 2020. The chip shortage is expected to reduce global light vehicle production by about 1.1 million vehicles, which is lower than previously forecast. With the full implementation of stricter emission regulations in Europe and China (European 6d and China 6 emission regulations for light vehicles and China's VI emission regulations for heavy vehicles), the growth in platinum demand in the automotive sector has outpaced the growth in vehicle production, driving an increase in the use of platinum catalysts. Platinum replacement of palladium in gasoline vehicle catalysts in China, North America and Europe is expected to further boost demand for platinum.

Driven by the overall improvement in economic activity, platinum demand in industrial applications is expected to increase by 25 per cent (+ 486000 ounces) compared with 2020, particularly in the glass industry, which is expected to increase by 70 per cent (+ 260000 ounces). The demand for platinum in the glass industry is growing due to strong demand for LCD panels and growing demand for composites for all key end-uses, including construction and green energy.

Demand for platinum jewelry is expected to recover by 9 per cent (+ 158000 ounces) in 2021. Strong year-on-year growth in the first quarter suggests that rising demand in North America, Europe and India will drive an improvement in platinum demand in 2021.

There was a market shortage of-158000 ounces for the third year in a row in 2021, mainly because strong demand in the automotive and industrial sectors offset the forecast decline in demand in the investment sector.

Platinum investment logic-economic recovery, persistently high prices and shortages support investment demand

As the launch of the novel coronavirus vaccine promotes the economic recovery, and the US government's $2 trillion infrastructure investment plan provides confidence for the sustainability of the global economic recovery, in the first quarter of 2021, the pace of global economic activity accelerated sharply in the first quarter of 2021, with global factory orders approaching the highest level in a decade in March. Investor interest in commodities and industrial metals has increased as economic activity has become active, which has also increased investors' risk appetite. Investor interest has also contributed to platinum gains, leading to continued higher prices and successive shortages.

In fact, the average price of platinum in the first quarter was $1162 per ounce, up 29 per cent from a year earlier and 23 per cent quarter-on-quarter, the highest quarterly average since the first quarter of 2015. Three consecutive quarters of shortages in 2020 continued into the fourth quarter, and ended in shortages in the first quarter of 2021. For the whole of 2021, the shortfall for the third consecutive year is expected to increase from-60, 000 ounces to-158000 ounces. However, despite the significant increase in investor interest and rising price levels, platinum is still grossly undervalued compared with other precious metals such as gold and palladium (palladium can be replaced by platinum one-to-one in gasoline car catalysts). Platinum prices do not fully reflect the strong demand growth potential of platinum and the problem of limited supply.

We believe that in the short to medium term, the growth in platinum demand is driven by the strong growth in platinum and palladium substitution in gasoline vehicle catalysts, but it has not yet been fully disclosed, and the increased platinum load in the world's major automotive markets to meet increasingly stringent emission regulations. As more investors are attracted by the demand growth potential for platinum, investment demand in 2021 is likely to exceed our published forecasts and maintain strong momentum in 2022. With the development of hydrogen policy framework and the rapid increase of investment commitments, investors' broader understanding of the strategic role of platinum in the hydrogen economy will enhance this trend.

In the context of growing demand, the limited supply of platinum makes the investment logic of platinum all the more striking, as the combination of these two factors causes the continuous shortages of 2019 and 2020 to continue into the 2021 forecast. The recent rise in platinum prices, coupled with the already very high prices of palladium and rhodium (the latter two have experienced significant increases since 2018), have sustained the profitability and free cash flow of platinum group metals mining companies until 2021. As a result, the big three platinum producers have begun to announce new mining projects, which overall could significantly increase the supply of platinum, but production will not appear until three or four years later. These producers have confirmed that their platinum production will remain stable for at least the next three years, despite current high prices.

The Anglo-American platinum (AngloAmerican Platinum) converter plant stopped production in 2020, seriously reducing the production of refined platinum, and the smelter accumulated about 500000 ounces of platinum. Some investors worry that these raw materials could be processed quickly through concentrators in 2021, leading to a glut and driving down prices. This is not the case. In public statements in February and April this year, Anglo-American Platinum confirmed that the processing of platinum raw materials accumulated before the closure of the converter plant in 2020 would take place in 2021 and 2022. Today we released a South African refining production forecast of 4.34 million ounces, including about 200000 ounces of raw material being processed by the converter plant, with the remaining 300000 ounces expected to be processed in 2022.

The potential for demand growth-replacement, load and hybrid driving demand growth in the automotive sector, and increased confidence in the hydrogen economy have boosted investor interest

Global car production in 2021 remains uncertain because of concerns that the continued spread of the epidemic and chip shortages may reduce the expected level of car production and sales. However, we firmly believe that the potential demand for platinum in the automotive sector in 2021 will significantly exceed our currently published forecasts, as we believe that the currently published information does not provide comprehensive information on the amount of platinum and palladium replaced in gasoline vehicle catalysts. and the additional amount of platinum required per vehicle to meet Euro 6d emission regulations. We also believe that these two trends driven by higher-than-expected demand will continue into 2022 and will be boosted by more market share for gasoline hybrids and diesel hybrids.

So far, the discussion and analysis of alternatives by some manufacturers and automobile companies have focused almost entirely on the replacement of platinum and palladium in automotive catalysts that have been produced and sold. The focus on this alternative has led many market commentators and analysts to expect the replacement of platinum and palladium to be slow and contribute little to current platinum demand. Recent public statements suggest that some catalyst manufacturers expect the amount of platinum needed to replace existing cars to reach 150000 ounces this year and more than 1.5 million ounces by 2024 before any recent change in emission levels. However, we believe that this narrow definition of substitution underestimates the true scope of current platinum and palladium substitutions and may actually underestimate the amount of platinum that has already taken place. In Europe and China, new lower emission levels must be implemented by January 2021 to achieve Euro 6d, China 6a and, in some cases, China 6b compliance, which means that all models sold in both markets this year, their emission systems must be replaced three years in advance. This means that platinum may have been used to replace palladium of the about 31 million light gasoline vehicles expected to be produced in China and Europe this year, requiring little additional engineering, testing or certification costs, and, given the proprietary and confidential nature of such developments, car companies and catalyst manufacturers do not need to publicly disclose replacement information. WPIC's forecast analysis shows that if platinum is replaced by palladium in 30 per cent of the catalyst in 20-30 per cent of the early release of new cars in both markets, platinum demand will increase by about 285000 ounces to 428000 ounces in 2021. This will complement demand in addition to "substitution" in the production of automotive catalysts before emission levels change, and could significantly boost platinum demand. Our forecast for platinum demand in the automotive sector in 2021 released today does not include this additional potential platinum demand.

The impact of tighter emission regulations on metal load will increase the pressure on car engine factories to replace palladium with platinum. In Europe, we estimate that in 2020, in order to meet the requirements of Euro 6d emission regulations, the average palladium carrying capacity of gasoline light vehicles increased by 30% to 45%, while in China, before the full implementation of national 6a emission regulations in January 2021, the average palladium carrying capacity of Chinese vehicles increased by about 50%. This consumption trend is part of the reason for maintaining the shortage of palladium in the palladium market, exacerbating the upward pressure on palladium prices and further accelerating the replacement of platinum and palladium in gasoline and gasoline mixed catalysts. For European diesel vehicles, the extreme technical challenge of reducing NOx (NOx) emissions in actual driving tests from about 800mg / km to less than 80mg / km as required by Euro 6d regulations will also significantly increase the amount of platinum used and lead to an increase in demand for platinum. In fact, the actual driving emissions of most new Euro 6d-compliant diesel vehicles have been reduced to about 20mg / km, an excessive achievement that highlights carmakers' concerns about their reputation and the extent to which they ensure compliance. Keep in mind that under the unprecedented requirement of reducing nitrogen oxide emissions to more than 700mg / km, although the European diesel vehicle emission control system has almost completely shifted to the selective catalytic reduction system (SCR), which uses less platinum than non-SCR systems, we believe that each SCR DOC (diesel oxidation catalyst) plant needs at least 20-40% additional platinum to react with the increased urea dose. Convert more nitrous oxide into nitrous oxide. However, like the amount of palladium in gasoline vehicles, the amount of platinum in diesel vehicles, which is likely to increase from 2020, remains a secret for carmakers and catalyst makers. The decline in car sales due to the epidemic in 2020, coupled with the impact of platinum and palladium replacement in gasoline vehicle catalysts, masked the load trend of diesel vehicles in Europe. From 2021, the full impact of the increase in diesel capacity per European vehicle is likely to generate more than 100000 ounces of incremental platinum demand. Similarly, this additional potential platinum demand is not included in our 2021 automotive demand forecast released today.

An important impact of the increase in platinum demand in China's automotive sector on the secondary procurement market is the increase in (HD) loads from heavy diesel vehicles to meet China's VI (HD) emission regulations, as well as platinum and palladium replacement from light gasoline vehicles, which has increased the purchases of physical metals by Chinese automakers. Chinese mainframe plants do not hedge in the long term as their Western counterparts do, which means they rely on spot metal purchases to meet the demand for catalyst production. We have previously stressed that the impact of Chinese automakers buying physical metals on the spot market has been reflected in the palladium market, which is a key factor leading to the surge in palladium prices in 2019 and the rapid recovery of the market from the epidemic in 2020. We believe that this impact has provided substantial support for platinum prices in the range of $1100 to $1200 per ounce, which has been true for most of the year so far. Because changes in futures positions have less impact on prices than usual.

Hybrid is still the main strategy for most automakers to reduce fleet emissions. In the first quarter of this year, the proportion of hybrid and electric vehicle (BEVs) sales jumped from 3:1 to 4ve1 in the first quarter of 2020, accounting for 27 per cent of the 3 million passenger cars sold in Europe, while electric vehicles accounted for only 7 per cent, according to (ACEA), the European automakers association. What is thought-provoking is that although many European governments continue to provide large subsidies for the purchase of electric cars, the decline in electric car sales has occurred. Due to the relatively slow investment in clean power and fast charging infrastructure, which limits the popularity of pure electric vehicles, many mainframe factories believe that it is necessary to continue to expand the sales penetration of hybrid vehicles in order to meet the carbon reduction targets of the fleet. If the infrastructure cannot meet the growth in pure electric vehicle sales, we believe that hybrid gasoline and hybrid diesel vehicles will be the most likely alternatives, and by 2030 / 2035, the use of (ICE) to support the internal combustion engine will far exceed the sales ban on internal combustion engines / hybrid vehicles currently under discussion.

The continuous introduction of the global policy framework for the development of hydrogen energy economy, coupled with the acceleration of financing commitments for hydrogen energy projects, is the key to boost investors' confidence in the development of hydrogen energy economy, which in turn increases the certainty of the long-term growth of platinum demand. The energy plan of China's 14th five-year Plan released in March this year regards the development of domestic hydrogen economy as a key strategic goal for the first time. At present, the strategy for the development of China's hydrogen economy has been devolved to the Chinese provincial government. 11 of the largest provinces have pledged to plan key investments in green hydrogen production capacity, hydrogen fuel cell hydrogenation infrastructure and fuel cell vehicle penetration over the next five years. In China, the shift from framework policy objectives to firm investment commitments has traditionally guided the rapid development of related industries. For example, in the energy sector, this phenomenon is most obvious in wind and solar power generation, and China has become the largest provider of renewable energy technologies. The financing commitment of hydrogen energy is not limited to China. The United States has promised to include the development of green hydrogen proposed at the leaders' climate summit (Leaders Summiton Climate) in April and to reduce the cost of green energy technology, thereby reducing the cost of green hydrogen production.

In the short, medium and long term, the growth potential of platinum demand is becoming more and more striking. The potential for long-term demand for platinum in green hydrogen production and fuel cell vehicle applications will continue to increase the number and range of platinum investors. These investors soon realized that replacement, increased load and more hybrid cars would lead to a significant increase in platinum demand in the short term in the face of limited supply. We believe that this will continue to provide a strong incentive for all investors to establish an investment position in platinum at the current price level. New highlight of WPIC business

The first quarter of 2021 is a period when WPIC continues to make positive progress. Overall, although it is more moderate than in 2020 and there are significant regional differences, the performance of the global physical platinum investment market remains strong. Institutional investment demand for platinum remains strong this year; global ETF holdings exceeded 90,000 ounces by the end of the first quarter of 2012. Regionally, the US and Europe have performed strongly, Asia has been neutral, and South Africa has reduced its holdings. On the other hand, we are pleased to welcome Tharisa Platinum as a new member of our association. Phoevos Pouroulis, CEO of Tharisa Platinum, joined our board of directors.

We remain committed to increasing the number and impact of our product partners in our four main target markets, China, Japan, North America and Europe.

In North America, we have partnered with SD Bullion, one of the largest precious metals distributors in the United States, to strengthen our partner base. WPIC will help develop new products to increase investor awareness and investment choices of platinum, thereby supporting partners' distribution of platinum investment products in 2021 and in the future. Despite the rise in platinum prices, the North American and European markets continue to maintain healthy demand for platinum, and market sentiment remains optimistic. The supply of platinum bars and coins has improved; however, sales appear to have slowed towards the end of the quarter and the second quarter. We will continue to work closely with our product partners to increase global investor awareness of platinum investment products and to support strong marketing campaigns.

In China, bank trading products backed by physical platinum are still on a regulatory moratorium. However, the level of growth reported by our Chinese partners confirms that this suspension helps stimulate investor demand for physical platinum bars. In addition, gold product manufacturers and wholesalers are once again interested in manufacturing and selling platinum bars as an investment alternative to platinum trading accounts. WPIC China has established a product partnership with Mattel Precious Metals Suzhou with the aim of selling platinum bars through Chinese banks in the future. China's commitment to carbon neutrality has made platinum more attractive to Chinese investors as an investment asset. The WPIC China team continues to use social media to develop interest in platinum investments and works closely with local partners to expand distribution through banks.

In Japan, in the first quarter of this year, we established a new partnership with (Rakuten Securities), one of Japan's largest securities companies, which currently offers platinum investment products. (Rakuten Securities) of Rakuten Securities believes that WPIC's research and insights will help advance its platinum accumulation plan. Our partners in Japan reported weak sales of platinum bars and coins in the first quarter of this year, mainly due to some profit-taking as platinum prices rose above 4000 yen per gram in February. However, we still see more and more Japanese media reports on platinum and emphasize its key role in the hydrogen economy and its inherent investment value.

As the global economy continues to recover from the devastation of the COVID-19 epidemic, a growing number of investors are considering increasing demand for commodities and buying platinum, supported by massive government stimulus funds. Platinum's attractiveness will be enhanced as more and more investors realize the increasingly critical role of platinum in the hydrogen economy. The limited supply of platinum and the huge potential for demand growth increase the possibility of new and existing investors increasing their holdings of platinum. We believe this may boost investment demand in 2021 and beyond.

PaulWilson, CEO

Chief Executive Officer of the World Platinum Investment Association

Review of Platinum Market in the first quarter of 2021

In the first quarter of 2021, the global economy continued to recover on the back of a wide range of stimulus measures. Less than a year after the World Health Organization declared 2019-nCoV 's pandemic, the extent of the recovery in some areas has been surprising as pent-up consumer demand has fuelled the economic recovery. In the automotive industry, however, supply chain difficulties are becoming increasingly apparent, hampering the industry's recovery. Nevertheless, platinum demand rose 26% (+ 405000 oz) to 1.969 million oz in the first quarter of 2021 from a year earlier, while total supply increased 11% (+ 187000 oz) to 1.95 million oz. Overall, this led to a small market deficit of-1.9 million ounces, compared with a market surplus of 199000 ounces in the first quarter of 2020.

Supply

In the first quarter, global refined ore production rose 14 per cent (+ 169000 ounces) from a year earlier to 1.412 million ounces, mainly due to increased production in South Africa and Russia.

South Africa's mineral supply increased by 15 per cent (+ 128000 ounces) as the Anglo-American platinum processing plant returned to normal capacity this quarter after completing phase An of the converter plant in November 2020. In the same period last year, the converter plant was completely shut down, resulting in a 26-day refining production loss. The second wave of the outbreak in South Africa peaked in mid-January, further disrupting the mining industry. This year, manufacturers delayed the return of some employees to work after the December holiday to ensure the effectiveness of epidemic prevention measures. However, the impact in the quarter was much smaller than the losses in the same period last year, with most industries closed for six days in the first quarter of 2020 during South Africa's national blockade in the first half of 2020.

Despite the two major accidents of structural failures at the concentrator and the shutdown of two mines after water seepage, Russian production increased by 23 per cent (+ 34000 ounces) compared with the same period last year. The expansion of new precious metal production lines has led to an one-off reduction in work-in-process inventory, boosting refining production. Platinum supply in other regions has not changed much and there has been no significant interruption during the period.

Producers continue to accumulate refined inventory, reaching 23000 ounces in the quarter. As a result, inventories returned to more normal levels after reducing inventories in response to the interruption in the first half of 2020 to support sales. In addition, record basket prices and profit margin growth in platinum group metals have eased income pressure, thereby reducing the focus on the release of working capital.

Recovery

Driven by an increase in automotive catalysts and jewelry recycling, global recycling increased by 18% (+ 85000 oz) to 561000 oz in the first quarter of 2012. The amount of platinum recovered from waste automotive catalysts increased by 9 per cent (+ 36000 ounces) to 429,000 ounces. However, as the impact of the epidemic has begun to spread to the industry, the growth rate in the first quarter of 20 years has been slightly weak. Therefore, what is more telling is that the quarter-on-quarter growth rate is only 1%. Jewelry recycling increased by 69 per cent (+ 48000 ounces) in the first quarter of 2012. Almost all of the increase comes from China, due to higher prices, fewer epidemic restrictions and some retailers recycling unsold inventory to help cash flow. Despite the big increase and rising prices, the total amount of jewelry recycled in the first quarter of 2012 was still lower than in the previous two quarters.

Demand

Overall platinum demand grew by 26% (+ 405000 oz) in the first quarter of 2012, much of which was driven by a decline in platinum demand in the glass industry in the first quarter of 2020. In the first quarter of 2012, industrial demand increased by 201000 ounces year-on-year, while investment demand increased by 69000 ounces year-on-year. Demand in cars and jewelry increased by 50, 000 ounces and 85000 ounces, respectively. However, quarter-on-quarter trends show that global demand is virtually unchanged from the fourth quarter of 2020, especially in the chemical and oil sectors, which remain weak as a result of the epidemic.

Demand in automobile field

Despite difficulties in starting vaccine projects and a rise in the number of virus cases in some areas, production has been affected by semiconductor shortages and tighter blockades, platinum demand in the automotive sector grew by 8 per cent (+ 50,000 ounces) in the first quarter of 2012. Platinum demand in Europe fell 8 per cent (- 25000 ounces) in the quarter, severely affected not only by a reduction in production of about 270000 vehicles related to chip shortages, but also by a 13 per cent drop in production of light diesel vehicles, while production of battery electric vehicles increased by 121 per cent and production of gasoline hybrid vehicles increased by 109 per cent. So far this year, the market share of diesel passenger cars in western Europe is 26 per cent, compared with 29 per cent in the same period last year.

North America has also been plagued by an influx of disruptive forces. In addition to the shortage of chips, the region has also been affected by bad weather, leading to the shutdown of many chemical plants in the Gulf of the United States. As a major consumer of petrochemical products such as sponge rubber for car seat cushions, this has led to further disruptions. In contrast to Europe, despite the disruption, platinum demand in North America increased by 12% (10,000 ounces) in the current quarter as electrification lagged behind other regions. increased production of diesel and light gasoline vehicles and the impact of some outbreaks in the first quarter of 2020 have all led to a year-on-year increase in platinum demand.

In China, the light vehicle market showed extraordinary resilience in 2020, but was not immune from the challenges of the semiconductor supply chain in the first quarter of 2021, with an estimated "loss" of 600000 vehicles. However, the growing desire to buy cars and the continued implementation of stricter emissions regulations (China's No. 6 emission regulations apply to light vehicles, while China's VI emission regulations apply to heavy vehicles) have pushed platinum demand in the region to 85000 ounces, almost double that of last year. It is worth noting that in the first quarter of 2020, China's production was severely limited by measures to contain the epidemic.

In "the rest of the world", the lifting of the blockade and the recovery of economic activity further contributed to the growth in platinum demand in the current quarter. In India, heavy vehicle production increased by 10 per cent, as 85 per cent of all vehicles produced in the quarter were equipped with DOC and DPF, to comply with Bharat VI regulations. Unfortunately, given the current state of the epidemic, production in the second quarter may be affected. Demand in the field of jewelry

After a very weak first quarter of 2020, demand in the jewelry sector recovered by 22% (+ 85000 ounces), but has not yet reached the strong performance of the fourth quarter of 2020. European manufacturing grew by 5 per cent (+ 3000 ounces) in the first quarter of 2021 due to strong demand from export-oriented high-end watches and jewelry brands. However, wedding-oriented local sales continued to be weak as a result of the epidemic, especially in the UK, where sales were still down 2 per cent from the first quarter of 2019, despite restocking by some retailers.

Jewelry manufacturing in North America grew by 14 per cent (+ 11000 ounces) in the first quarter of 2021, an increase of 2 per cent over the first quarter of 2019. This is due to a series of factors, including the mixing of price differences with gold, the transfer of consumer spending from the service sector, the accumulation of retailers' inventories, economic improvement and government revenue support measures.

China's platinum jewellery industry grew 55 per cent (+ 70, 000 ounces) to 197000 ounces in the first quarter of 2012 from a year earlier, having had a severe impact on the industry due to outbreaks related to the epidemic in the previous quarter. Despite a healthy recovery, the total is still 15 per cent lower than 232000 ounces in the first quarter of 2019 before the outbreak. By contrast, gold jewelry manufacturing in the first quarter of 2012 was 6 per cent higher than in the same period in 2019, the highest performance since 2015. Local jewellery wholesalers and retailers say fierce competition from the gold jewellery market has had a serious negative impact on platinum jewellery in the past quarter. Due to the fall in gold prices and the rise in platinum prices, gold looks like a more attractive option even though the absolute price of gold is still higher than platinum throughout the quarter. In addition, manufacturers and retailers have stepped up gold promotions as China's Spring Festival holiday is a traditional season for gold gifts. Growing interest in gold in the local market has led retailers to reallocate inventory to gold jewellery products at the expense of platinum.

In India, the platinum jewellery industry grew 35 per cent (+ 6000 ounces) to 21000 ounces. Pent-up demand, weddings, holiday shopping and Valentine's Day marketing activities have driven strong demand growth. Jewellery manufacturing outperformed consumption as retailers focused on restocking in anticipation of a further recovery in demand in the second quarter of 2021.

Industrial demand

Demand in the industrial sector increased by 44 per cent (+ 201koz) in the first quarter of 2021 compared with the first quarter of 2020. An important driver of year-on-year growth is the revision of demand in the glass industry and the redistribution between quarters, which tilts the basic dynamics of demand in the glass industry and in all industrial sectors. In key sectors, demand in the chemical and oil industries is lower than in the first quarter of 2020 due to the stagnant recovery in oil consumption in the second half of 2020. In contrast, demand in the electronics, health and other industrial sectors increased in the first quarter of 2021 as the success of the vaccine programme continued to drive economic recovery.

Petroleum

Platinum demand in the oil industry remained weak in the first quarter of 2021, with sales down 19% (- 0.6 thousand ounces) from a year earlier. China is the main reason for the decline in demand, although demand was boosted by the opening of a large integrated petrochemical plant in the first quarter of 2020, reflecting a high base. Outside China, demand remains below pre-epidemic levels as measures to control the spread of the epidemic continue to put pressure on global oil consumption. However, there are already some signs of improvement, particularly in the US, where faster vaccine rollout and improved economic activity have led to a stable normalization of refinery operations this quarter.

(1) the integrated production capacity "grabs" the demand of the petroleum and chemical industry.

Chemical engineering

Platinum demand in the chemical industry fell to 119000 ounces in the first quarter of 2021 compared with the same period last year (- 57,000 ounces) and quarter-on-quarter (- 52,000 ounces). Due to the lack of new capacity and the high base caused by large-scale Chinese investment in the first quarter of 20 years, weak demand in the petrochemical industry almost contributed to the decline in all demand in the first quarter of 2021. As a result, demand for the first quarter of 2021 is entirely driven by supplementary demand during the replacement of catalysts. In contrast, the use of platinum in silica gel continued to reach pre-epidemic levels. As has been the case in previous quarters, platinum demand in the medical, health and health application industries has benefited from the current epidemic. Demand for silicone has also been boosted by a sharp rebound in areas such as construction, driven by massive government fiscal stimulus. The amount of platinum related to nitric acid production remained generally stable compared with the previous quarter. Even though many emerging countries face a sharp rise in epidemic infections in the first quarter of 2021, the agricultural sector, including fertilizer production, has been designated as an essential sector and is therefore not affected by business closures and mobility restrictions.

Medical treatment

After many countries significantly reduced the number of novel coronavirus cases due to blockade strategies and enhanced vaccination campaigns, several medical technology companies reported that hospitals were back to normal by the end of the quarter, compared with the first quarter of 2020. sales of platinum-containing medical devices have rebounded. The United States and Europe have also reported a recovery of hospitalized cancer treatment, including platinum-containing cancer treatment. Platinum use in the healthcare industry has increased by 5 per cent (+ 3000 ounces), but is still below 2019 levels.

Glass

The reduction in the installation of LCD tank capacity in the first quarter of 2020, coupled with a surge in the most recent quarter, led to a sixfold year-on-year increase in platinum demand in the industry, reaching 279000 ounces in the first quarter of 2021. Typically, most of the new investment is in China, mostly factories, which might have started production months ago had it not been for last year's crisis. Slower-than-planned capacity expansion, production disruptions in recent months and still strong demand for LCD panels have led to tight supply in the glass substrate market, which is also reflected in rising substrate prices.

Electron

Demand in the electronics industry is up 1 per cent year-on-year (+ 200 ounces). The growth in semiconductor platinum applications has offset the decline in demand for platinum for hard drives in the consumer electronics sector. In addition, demand for near-line storage and cloud services partly contributed to platinum demand, as the decline in hard drive shipments was partially offset by increased platinum loading in high-capacity drives. In enterprise and surveillance products, platinum demand for hard drives remains weak due to the ups and downs of the epidemic, but demand for solid-state drives is rising in emerging applications such as entertainment (including game consoles and automotive infotainment systems) and aerospace. It is worth noting that the recent "cryptocurrency boom" has led to hot sales of high-capacity hard drives for "mining" storage-based cryptocurrencies. This has created a short-term shortage of hard drives in the retail market and is likely to boost demand for these devices in the coming months.

Other

Demand in other industrial sectors surged by 23% (+ 2.7 thousand ounces) in the first quarter of 2012, mainly reflecting a low base last year. Sales of spark plugs and sensors have performed well due to the broad recovery in automotive production and automotive after-sales service. However, due to power outages caused by extreme weather in Texas and a fire at a Japanese semiconductor factory in the first quarter of 2012, leading to an unprecedented shortage of chips, some car chipmakers stopped production, forcing carmakers to cut production at the end of the quarter. Delayed car production is likely to increase demand for platinum for spark plugs and sensors in the second quarter of 2012.

Demand in the field of investment

In the first quarter of 2012, demand for platinum bars and coins fell 94 per cent (- 288000 ounces) from a year earlier to just 17000 ounces, the lowest total since the third quarter of 2014, when the WPIC platinum quarterly report series began. This is almost entirely the result of Japanese investors taking advantage of the strength of platinum prices to sell it back to the market. Japan's net investment in platinum bars and coins shrank by-107000 ounces in the first quarter, while net investment shrank by-16000 ounces in the fourth quarter of 2020. These recent trends are in sharp contrast to Japan's all-time high of net purchases in the first quarter of 2020. Demand for platinum bars and coins in North America weakened in the quarter, falling 21 per cent (- 26000 ounces) to 94000 ounces from a year earlier, mainly because the US Mint issued fewer platinum coins this year. However, as the shortage of platinum bars during 2020 has eased this year and consumer interest in hard assets and precious metals remains high, demand in the quarter is still nearly double the quarterly average of the past two years. In Europe, due to positive price expectations and an increase in the supply of precious metal investment products, sales of platinum coins and small grams of heavy platinum bars rose 46 per cent from the previous quarter, only 6 per cent lower than in the first quarter of 2020 (- 1000 ounces).

ETF holdings grew for the fourth consecutive quarter in the first quarter of 2012. Global holdings reached 3.971 million ounces at the end of the quarter, a series of all-time highs. Europe and North America account for the vast majority of ETF increments. To a large extent, this significant increase reflects growing optimism about the outlook for platinum demand, particularly with regard to the replacement of automotive catalysts and the use of hydrogen technologies. However, modest profit-taking from Platinum ETF in South Africa and Japan offset some of the gains.

Prospects for 2021

With more than 1 billion people vaccinated around the world, the prospects for economic recovery are becoming more and more optimistic. While some of the consequences of the severe "haemorrhage" in the economy last year may still be unclear, aggressive monetary and fiscal stimulus measures introduced by many governments and the release of pent-up consumer demand have contributed to a rapid recovery in industrial and economic activity. In addition to stimulus packages, many governments are developing strategies that are more in line with the climate action agenda, although this will be a long period of time, but further boost the attractiveness of green technology metals such as platinum. This year, both the supply and demand of platinum will benefit from the rapid recovery after the impact of the epidemic. Renewed industrial activity will lead to an increase in platinum consumption in manufacturing, while rising prices and optimism about future demand growth will stimulate investment demand. Overall, we expect demand to grow by 5 per cent (+ 378000 ounces) to 8.041 million ounces in 2021, although this will still be below the level of 8.321 million ounces before the 2019 outbreak. Supply is projected to increase by 16 per cent (+ 1.083 million ounces) to 7.883 million ounces, reflecting the serious impact on supply of outbreaks-related business reductions and non-epidemic-related processing plant closures in 2020. As a result, a small shortfall of-158000 ounces is expected in 2021.

Supply Supply is expected to rebound in 2021, rising 20 per cent (+ 988000 ounces) year-on-year to 5.957 million ounces after the interruption of mineral supplies in 2020. South Africa's production is expected to increase by 32 per cent (+ 1.042 million ounces) as converter production returns to full capacity for the year and mining disrupted by the epidemic is alleviated. The Phase A unit of the Anglo-American Platinum Converter Plant continues to return to its full capacity of that year, and it is estimated that 200000 ounces of the 500000 ounces of semi-processing inventory established in 2020 will be processed to supplement refining production. The reconstruction of the full capacity reserve phase B unit is planned to be completed in the second half of 2012, which, once completed, will reduce the risk of any further shutdown. The remaining 300000 ounces of inventory is expected to be processed in 2022.

South African platinum mines are managing epidemic prevention measures more than expected, and many of the mines in operation are more efficient than planned. Persistently high basket metal prices continue to provide healthy cash flow and drive project development. However, the recently announced increase in projects will only increase long-term supply. However, the resumption of existing projects and the successful management of epidemic prevention measures have led some producers to increase their production guidelines for 2021, so we have increased South Africa's supply prospects by 3 per cent (+ 142000 ounces) compared with previous forecasts in March 2021.

So far, Russian production has experienced two major disruptions in 2021. On 12 February, groundwater seeped into the Oktyabrsky and Taimyrsky mines and production was suspended, while on 19 February, a building at the Norilsk concentrator collapsed and the plant was temporarily closed. Full rehabilitation of these facilities is under way and remedial measures for water seepage have exceeded the initial time limit. The net effect of the two accidents was that Nornickel's projected production was reduced by 69000 ounces, while Russian national production is expected to fall by 12% (- 82000 ounces) compared with the same period last year. Elsewhere, North American production is expected to grow by 8 per cent (+ 28000 ounces), mainly due to the successful launch of a project in Montana, while production in other regions is expected to be relatively flat.

Recovery

This year, total recycling is expected to increase by 3 per cent (+ 64000 ounces) to 1.975 million ounces. This reflects the expected recovery in the supply of automotive catalysts and waste jewellery compared with 2020, but still lower than it was before the 2019 epidemic.

Automotive catalyst recycling supplies are expected to grow by 2 per cent (+ 29000 ounces) to 1.462 million ounces, remaining below pre-epidemic levels. Due to the lack of smelting and or refining capacity, the industry is expected to be close to full capacity, so the growth potential is greatly limited. The undercapacity in turn reflects two factors, namely, the number of spent automotive catalysts and the increasing supply of diesel particulate filters (DPF), particularly in Europe, where many of these filters contain silicon carbide, which increases the complexity and time of processing. In 2006, some large diesel engines adopted the device for the first time in order to comply with Euro 4 emissions, but it was mandatory in 2009 under Euro 5 emission regulations. As more and more scrapped cars use DPF, it is becoming a more and more important factor in the automotive catalyst recycling industry.

In addition, high prices for rhodium and palladium, coupled with rising platinum prices, have made it more difficult for some sectors of the industry to finance the purchase of spent catalysts. In some markets, this leads to the accumulation of raw materials in waste plants. This, in turn, will affect the industry's ability to recover platinum in 2021, which explains the limited growth in global platinum recycling this year.

Jewellery recycling is expected to recover 8 per cent (+ 33000 ounces) to 455000 ounces this year, but the total will still be lower than before the outbreak. The expected increase reflects a marked relaxation of blockade restrictions, coupled with the impact of rising platinum prices. Due to the low inventory closely related to the market, there has been only a slight recovery in the Japanese jewelry recycling market.

Demand

We expect demand to grow by 5 per cent (+ 378000 ounces) to 8.041 million ounces in 2021, driven mainly by a recovery in demand in the automotive, jewelry and industrial sectors. In the short term, investment demand continues to be driven by demand growth potential and supply constraints, as well as the long-term outlook for platinum to attract more investors. We expect ETF holdings to grow by 250000 ounces. In addition, we expect that high platinum prices will attract new individual investment, but it will also lead to an increase in paper profits for some investors, thereby increasing the sell-off. As a result, overall, demand for platinum coins and bars is expected to fall by 26% (- 150000 oz) to 436000 oz, although this is still high by historical standards. For the investment sector as a whole, we forecast demand of 726000 ounces in 2021, down 53 per cent (- 823000 ounces) from the record platinum investment demand in 2020.

Demand in automobile field

At a time when the car industry appears to be close to 2019 production, the production outlook has been lowered compared with previous optimism as the shortage of semiconductors for car production has escalated. The problem first emerged in late November and is expected to have the worst impact on the auto industry in the first half of this year and will continue in the second half of this year. Despite this challenge, car production is expected to show a healthy year-on-year recovery, particularly in the light vehicle industry. It should be noted, however, that this prediction is still vulnerable to the unforeseen impact of outbreaks and the possible resurgence of the virus in some areas. Global light vehicle production is expected to be 86.5 million in 2021, an increase of 16 per cent over 2020, while heavy vehicle production is expected to increase by 3 per cent. This will boost platinum demand by 24 per cent (+ 557000 ounces) to 2.925 million ounces and exceed pre-2019 levels. The healthy recovery in platinum demand across the market has been driven by increased car production and stricter emission regulations, especially in the heavy truck industry.

In Europe, demand is expected to return to much higher levels than in 2020, but still lower than in 2019, as incentives and government policies promote the popularity of battery electric vehicles and electrified power systems, especially passenger cars. Europe's diesel market share is expected to fall to 25 per cent from more than 50 per cent five years ago. However, stricter emission requirements and testing procedures, as well as high palladium prices, have contributed to the increase in platinum loads.

Platinum demand in North America will also grow this year, even surpassing 2019 levels, driven by a strong recovery in passenger car demand, especially for large cars. In this area, the platinum content in the aftertreatment system of some gasoline vehicles will also be higher. In China, as more and more vehicles, especially heavy trucks and buses, are equipped with post-processing systems that meet China's VI emission standards, including the increase in DPF, to comply with stricter particulate matter regulations, platinum demand is expected to exceed that of most other regions. The partial use of platinum instead of palladium in light vehicles is also expected to boost demand for platinum.

Elsewhere, demand for platinum is expected to increase as car production and emission regulations improve. From April 2020, India will skip BSV emissions regulations and implement BSVI regulations for light and heavy vehicles, an ambitious move that will increase India's platinum demand by more than 50 per cent. However, given that a new wave of the virus has spread, particularly in India, there is a growing risk of predicting a recovery in platinum demand in the rest of the world. Demand in the field of jewelry

Demand for platinum jewellery is expected to pick up in 2021, rising 9 per cent (+ 158000 ounces) from the previous year to 1.978 million ounces. Even so, total global jewellery demand is expected to be lower than the 2.099 million ounces in 2019.

Platinum jewelry purchases in North America are expected to grow strongly this year due to spreads with gold, increased inventories, improved economic conditions and delayed weddings. However, growth is likely to slow in the second half of the year because of the recovery in spending on tourism and other services.

European jewellery manufacturing is expected to rebound in 2021, mainly due to a further increase in production by high-end brands, some of which have achieved record sales through strong exports to East Asia. However, there has been only a slight recovery in sales in the local mass product market, which means sales are only slightly lower than they were before the outbreak. Demand for platinum jewelry in China is expected to be flat for the rest of the year, following weaker-than-expected demand for platinum jewelry in the first quarter of 2021. Increased competition from the gold market and our forecast for a rise in platinum prices this year have depressed the demand outlook for the platinum jewelry market. In addition, unusually high inventories in the second half of 2020 may put pressure on jewelry manufacturing this year.

In India, we expect demand to remain strong after positive growth in the first quarter of 2021. However, as uncertainty lingers after a new wave of infections and troubled health infrastructure, which could dampen consumer sentiment and hamper demand recovery, there are still real risks to the demand outlook.

Industrial demand

Improved economic activity will lead to a 25 per cent (+ 486000 oz) increase in demand for platinum in industrial applications. Demand in the chemical industry is expected to grow by 11 per cent (+ 62000 ounces), while demand in the oil industry will rebound by 65 per cent (+ 71000 ounces). Given that delays and changes in plant expansion plans have led to some major adjustments in demand in the glass industry, platinum demand in the industry is expected to grow by 70 per cent (+ 260000 ounces), while demand in the healthcare industry is expected to grow by 5 per cent (+ 11000 ounces). Supported by the growth of the automotive industry, increased use of fixed fuel cells and the Green hydrogen development agenda, demand in other industrial sectors is expected to grow by 17% (+ 85000 oz). Despite the growth in consumer electronics, platinum demand in the electronics industry is expected to fall slightly by 2 per cent (- 3000 ounces).

Petroleum

Platinum use in the oil industry is expected to grow 65 per cent (+ 71000 ounces) year-on-year to 179000 ounces this year. Part of the premise of this growth is that refinery capacity will eventually rebound as the global economy continues to improve, especially in the second half of this year. Because of the epidemic, last year some refineries postponed their planned transformation (replacement of catalysts) to this year or 2022. As a result, platinum demand from processing losses and additional platinum during turnover was adversely affected in 2020. Due to the launch of some delayed turnover in 2021, this will be good for platinum demand this year. Finally, continued capacity expansion in China and the completion of new plants elsewhere, when construction was affected by the novel coronavirus crisis, will further boost demand for platinum.

Chemical engineering

Demand is expected to grow by 11% (+ 62000 oz) to 647000 oz, and all key applications are expected to grow. Starting with the petrochemical industry, another large integrated oil refining and chemical plant is expected to start production in China in mid-2021 as China seeks to become self-sufficient in the petrochemical industry. In addition, oil company Saudi Aramco is expected to start production of a new p-dimethylbenzene plant in Saudi Arabia later this year. As the global economy continues to improve, platinum demand for silicone production will also recover healthily. In view of the slight pick-up in new production capacity, nitric acid production is also expected to increase slightly

Glass

Although the strong platinum demand recorded by the glass industry in the first three months of this year will be difficult to break, we expect platinum demand to maintain a healthy trend for the rest of 2021. This is mainly due to the ongoing implementation of existing capacity expansion or installation plans, coupled with the strong demand for LCD panels and the healthy and growing use of composites for all key end-uses, including buildings and green energy. Although our demand data do not reflect this, it is worth noting that due to the failure of some LCD furnaces in China and South Korea and the need for cold maintenance, there may be a short-term metal outflow from the industry. that is, some platinum will be lent. Overall, we expect demand to increase to 629000 ounces in 2021, a year-on-year increase of 70 per cent.

Electron

Affected by the decline in global shipments of mobile hard drives, demand in the electronics industry is expected to fall by 2 per cent (- 3000 ounces) to 127000 ounces in 2021. Despite the steady recovery in the consumer electronics market, the high performance and increasingly reasonable prices of SSDs have led to further losses to SSDs in personal computers and entertainment applications. However, with the commercialization of energy-assisted magnetic recording drives, mobile hard drives are likely to maintain their cost advantage and ensure their position in data centers and near-line storage. As a result, we expect the decline in platinum demand in the electronics industry to slow.

Other

As the automotive industry continues to recover, platinum demand for sensor components and spark plugs will remain strong in 2021. Although limited by the shortage of semiconductors, the demand for platinum will increase with the increase in the number of cars. In the field of aerospace, by 2022, the number of satellites involved in the deployment of low-Earth orbit satellites orbiting the Earth will be increased by 1585 from one. Platinum use in aerospace will grow by more than 25 per cent this year. Finally, the continuous application of proton exchange membrane electrolyzer for green hydrogen production and proton exchange membrane fuel cell technology using hydrogen will further increase the demand for platinum, although this demand is still small. Overall, we expect demand in these industries to grow by 17% (+ 85000 ounces).

Demand in the field of investment

This year, global demand for platinum bars and coins is expected to fall by 26% (- 150000 ounces) from the record number in 2020, but still maintain a good momentum of 436000 ounces. This reflects a decline in net purchases in each key region. While some retail investors will be attracted by rising prices, others will take the opportunity to make a profit. As a result, we expect an increase in sales in 2021, partially offsetting the total purchases of overall health that we expect to continue this year.

The bullish fundamentals of platinum demand will continue to drive new investment into ETF for the rest of 2021. Platinum is also likely to benefit from its positive spillover effects as institutional investor confidence in gold is expected to improve later this year. Talk of a new supercycle in commodities should also be good for platinum investment. On the other hand, strong platinum prices do increase the risk of profit-taking. However, unless the epidemic worsens sharply or financial markets are unexpectedly hit, confidence in future demand for platinum should limit the scale of the sell-off. Overall, we expect global ETF holdings to increase by 250000 ounces this year, a three-year low, following record inflows in 2019 and a significant increase in ETF investment last year.

Aboveground stock

The platinum market is expected to have a shortfall of-158000 ounces in 2021, compared with a much larger shortfall of-863000 ounces last year. Overall, this will cause the aboveground stock to fall to 2.526 million ounces. By the end of 2021, these stocks will be equivalent to four months of demand, compared with nearly five months at the end of last year.

The World Platinum Investment Association ((WPIC)) defines the above-mentioned aboveground stock as the year-end estimate of cumulative platinum holdings that are not related to exchange traded fund (ETFs), exchange held inventory or the turnover inventory of miners, refiners, manufacturers or end users.