Q3 platinum 2021 surplus of 592koz reflects significant ETF disinvestment
Before reviewing the third quarter supply and demand it is important to note that investment demand in Q3’20 was extraordinary. As world economies bounced back from the first series of COVID-19 lockdowns, significant uncertainties prevailed in the sustainability of the recovery which led to near record ETF demand, boosted by 342 koz of exchange stock growth due to market-making banks moving existing metal holdings from non-visible to visible locations.
Third quarter refined platinum supply was 7% (+101 koz) higher than in Q3’20, with 13% growth in refined mine production more than offsetting a 9% decline in recycling. Total mining supply of 1,569 koz was supplemented with some 140 koz of platinum from the further unwinding of ACP semi-finished inventory.
Although mine production stability in South Africa is significantly improved, underlying mine supply remained below the pre-pandemic Q3’19 level after stripping out the contribution from the ACP stock overhang.
Recycling supply was 46 koz lower year-on-year on reduced jewellery trade-in rates in China and price-driven scrapyard stockpiling reducing autocatalyst recycling. Automotive demand in Q3’21 of 617 koz was down 3% year-on-year, as higher loadings, particularly on heavy-duty vehicles in China, and increased platinum for palladium substitution substantially offset a 16% reduction in automotive production due to the ongoing global semiconductor shortage.
Jewellery demand was down 5% year-on-year despite strong recoveries in Europe and North America, as this was more than offset by ongoing demand weakness in China and a COVID-related state of emergency in Japan limiting in-store purchases.
Industrial demand of 603 koz was up 20% year-on-year, bolstered in particular by capacity additions in China’s glass sector, and also because the COVID restrictions that impacted Q3’20, suppressed demand on an exceptional basis. The biggest swing in year-on-year quarterly demand comes from investment demand, with Q3’21 1,208 koz lower than the record quarterly level in Q3’20. While bar and coin investment performed well, increasing 25% (+24 koz) over Q3’20, ETF disinvestment was 718 koz less than the exceptionally strong ETF inflows seen in Q3’20, and stock flow out of NYMEX similarly led to a -515 koz year-on-year swing. Consequently, the market balance in Q3’21 shifted to a surplus of 592 koz in contrast to the deficit of 704 koz in Q3’20.