Platinum: Deficit of 464 koz in Q2 2024 as investment demand shines
Platinum Quarterly has presented platinum supply and demand developments for the second quarter of 2024 and an updated forecast for full year 2024.The platinum market saw robust growth for both supply and demand in the second quarter of 2024. Mine supply increased by 5% year-on-year to 1,570 koz in Q2 2024, largely driven by South Africa.
The country benefitted from a marked year-on-year reduction in load curtailment and improved smelter availability during the quarter. This more than offset lower Russian and North American production stemming from planned smelter maintenance. Recycling increased by 1% year-on-year to 388 koz in Q2 2024.
Although automotive recycling supply increased by 2% year-on-year, scrap aggregators continue to highlight challenges securing sufficient feedstock, with lingering suggestions of hoarding by scrapyards. Total supply in Q2 2024 came to 1,958 koz, up 4% over last year and up 22% compared to the prior quarter, reflecting mine supply seasonality.
Quarterly demand of 2,421 koz in Q2 2024 reached a four-year high. Demand increased by 13% compared to a year earlier due to a sharp uptick in platinum ETF holdings (+444 koz). ETF investors were drawn to platinum due to its increasing discount to gold, expectations for interest rates easing, and platinum’s strong underlying fundamentals, reflected in consensus forecasts for a market deficit in 2024.
Elsewhere, platinum demand proved resilient during Q2 2024. Automotive demand was up 1% year-on-year as recent trends such as platinum for palladium substitution and higher-for-longer ICE-based vehicle demand persisted.
Jewellery demand increased by 5% year-on-year, with only North America recording lower demand (-1% year-on-year), albeit off a high-base. Industrial platinum demand decreased by 4% year-on-year in Q2 2024, almost entirely due to weaker chemical demand (-48% year-on-year) following fewer plant commissionings as China moves beyond a period of elevated capacity investment.
The net impact was a significant quarterly market deficit of 464 koz in Q2 2024.
Updated 2024 outlook
Total mine supply is forecast to decline by 2% year-on-year to 5,508 koz in 2024. Barring the one-off impacts from protracted strikes in 2014 and COVID in 2020, total mine supply in 2024 is expected to be at its lowest level within our time series dating back to 2013.
Notably, refined production is expected to be lower across each of South Africa, Zimbabwe, Russia and North America. South African output will be negatively impacted by announced restructuring plans, shaft/section closures and slower than previously expected production ramp-ups.
Although the Russian mine supply forecast has been revised up by 37 koz due to better-than-expected year-to-date performance, full year production at the upper end of Nornickel’s 2024 guidance will still be lower than output for 2023 due to planned smelter maintenance.
Recycling supply is expected to remain constrained in 2024, albeit with a forecast year-on-year increase of 36 koz in 2024 (+2%). Automotive recycling continues to be impacted by a lack of quality feedstock due to sourcing headwinds and hoarding. The result is that total platinum supply for 2024 is forecast to decrease 1% versus 2023 (-71 koz) and at 7,089 koz will be 8% lower than average supply over the past ten years.
