Platinum to play a significant role in the energy transition

Platinum’s strategic and economic importance is underlined with the United Sates, European Union and China recognising its critical mineral status, while the US Inflation Reduction Act, passed in August, further supports platinum demand from PEM technologies by accelerating growth in green hydrogen production and fuel cell electric vehicle adoption.

The urgent need for energy independence is also spurring on investment in hydrogen that is beneficial for platinum. Platinum-based proton exchange membrane (PEM) technologies will have a significant role to play in the energy transition.

“The considerable economic headwinds that have persisted throughout 2022 are expected to continue into 2023, yet the platinum market is forecast to be in deficit after two consecutive years of significant surpluses. This reflects supply that remains well below pre-pandemic 2019 levels and demand growth, despite the unfavourable economic outlook. Platinum’s resilience reflects growing automotive demand mainly due to increased substitution and higher loadings, and already committed industrial capacity additions. This puts platinum in a somewhat unique position versus other commodities in that demand is forecast to continue to grow, despite the recessionary outlook,” said Trevor Raymond, Chief Executive Officer of WPIC.

“Overlaying the 2023 deficit are the massive platinum imports into China in excess of identified demand, which have been ongoing since early 2021 and now stand at 2.5 Moz. These do not reflect in our published demand data. These excess imports, whether used or held as inventory, exceed the 2021 and 2022 global surpluses combined, and will not be available to re-enter Western markets to address the deficit in 2023 due to domestic export controls. This could lead to an even further tightening of the platinum market next year.

“Moreover, the recent COP27 has highlighted that the need to decarbonise is more acute than ever. Green hydrogen produced by platinum-containing electrolysers and used to displace natural gas, or as an energy source in fuel cell electric vehicles, has a significant role to play in the energy transition. While hydrogen-related platinum demand is relatively small in 2023 – of more relevance in a tight market – it is expected to grow substantially in the medium term, offering an option to investors looking for exposure in this area and further strengthening the investment case for platinum based on future demand growth.”

The market is forecast to be in a deficit of 303 koz in 2023 as global platinum demand is expected to increase by 19% (to 7,770 koz) while supply will increase by just 2% (to 7,466 koz).

• Platinum deficit forecast for 2023 as demand to grow by 19%, while supply by just 2%
• Downward revision of surplus forecast in 2022 by 17%
• Automotive demand continues upward trajectory; up 12% in 2022 and 11% in 2023
• Despite economic headwinds, industrial demand in 2023 to be up 10% and well above the ten-year average
• Bar and coin demand forecast to jump 49% in 2023, driving overall investment demand positive