“At the start of Q1’22, most regions were at various stages of a post-COVID economic recovery. However, Russia’s invasion of Ukraine at the end of February sent shockwaves through the markets, which will be felt for months and years to come. This new layer of complexity, on top of existing COVID-related factors and operational challenges, will add to the wider markets’ volatility.
With the backlog of semi-finished inventory built up during the 2020 Anglo American Platinum converter plant (ACP) outages now processed, we are left with the stark reality that South African production is actually below where it was in 2019. This, combined with a massive drop in recycled material, points to constrained supply for the coming months, as demand continues to grow.
While the cost of the tragic war in Ukraine will not be known for some time, the potential indirect impact it could have on platinum is considerable. Security-of-supply concerns, particularly for palladium have arisen in the wake of Russia’s invasion of Ukraine and given Russia’s importance to the global supplies of mined palladium and, to a much lesser extent, platinum.
This could increase platinum for palladium substitution efforts and modify the procurement and inventory management strategies of a wide range of market participants.
In addition to decarbonisation, security of energy supply for all Governments is now a far greater issue than it was. The role of green hydrogen in reducing European gas imports could drive a strategic acceleration of electrolyser construction, which would benefit platinum directly but also support the infrastructure needed for broad-based commercial adoption of FCEVs. Investors looking for green opportunities are becoming increasingly aware of platinum’s key strategic role in unlocking hydrogen’s crucial contribution to achieving global net zero targets; being used in both electrolysers to produce green hydrogen and in hydrogen fuel cells.”