A surge in platinum demand, especially from the industrial sector, will exacerbate the global platinum supply deficit in 2023, the World Platinum Investment Council (WPIC) said.
According to WPIC data, global platinum demand will rise by 28% this year compared with 2022, while supply will fall by 1% year-on-year.
The WPIC estimates that industrial demand for platinum, particularly from chemical and glass production in China, is on track to reach its highest level on record. Demand from the automotive industry also continues to be strong.
Investors took a genuine interest in the precious metal in the first quarter of 2023, with investment demand for platinum bars and coins up 71% year-on-year.
On the production front, recent rolling blackouts in South Africa, a country whose mining industry accounts for around 70% of world supply, have disrupted platinum production. Meanwhile, demand is coming at a time of strength, with a projected platinum deficit of 983,000 ounces in 2023, compared with the 556,000 ounce deficit forecast by the association in March. In addition to South Africa, Western sanctions on Russia will also lead to a decline in global supply, WPIC said.
Platinum’s supply deficit is likely to persist for years unless there is a significant increase in supply or a significant reduction in demand, said Trevor Raymond, chief executive of WPIC, while also saying that interest in platinum investment is likely to spread to other regions as well.
Raymond believes that the uncertain global economic environment, inflation headwinds and energy crisis provide a challenging macroeconomic backdrop for the platinum industry, but the chances of the precious metal falling in value are low. He added: “Platinum demand is expected to grow by 28% year-on-year in 2023, which is why it is hard to fall.”
Overall, the global platinum shortage is set to worsen in the coming quarters, leading to one of the worst shortages in platinum in half a century, which should continue to support spot prices for the metal.
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