Tharisa updates on PGM and chrome markets
The pressure seen in the PGM market manifested itself in some unusual and often aggressive selling patterns, with renewed fears of a macro economic slowdown, driven by China and the United States, compounding price pressures. This despite car sales being set to surpass production last year, which should underpin a demand for all PGM metals.
However, pipeline destocking meant that this increased demand was satisfied by pipeline inventories. We maintain that while prices are trading near 52-week lows, in the medium to long-term, prices should rise, driven by supply complexities in the major producing regions, with current pricing pressures leading to increased challenges faced by some higher cost producers.
While most commentators have pulled back price forecasts in line with recent events, the long-term outlook for even the most conservative forecasts are indicating higher averages for PGMs than current spot prices.
The chrome market showed its ongoing resilience as solid demand meant prices averaged well above those achieved in the previous quarters. While port stocks, which were sitting at multi-year lows have increased, the supply pipeline remains tight, particularly as inland logistics in South Africa remain challenging.
In addition, there have been no major primary output increases in the local market due to the lack of available resources and power constraints for smaller producers unable to access standby power.
The chrome market looks set to continue its strong performance for the remainder of the calendar year 2023, particularly as new furnace commissioning continues to draw on material demand.
