1 January 2021: Despite gold-related volatility, platinum’s demand growth outlook is driving more investor exposure: The platinum price has traded at over $1,100/oz so far in January 2021, a 47% increase from its March 2020. Despite this strong price performance, platinum is still undervalued versus its precious peer gold, and industrial substitute metal palladium. Despite two years of consecutive deficits, with a third deficit projected for 2021, platinum’s automotive and industrial uses appear overlooked when compared with industrial metals such as copper. The longer-term platinum price is driven by current and future expectations of supply/demand fundamentals, but with associated investor positioning typically placed in NYMEX futures. This positioning can be infrequent and of insufficient size to consistently prevent the short-term influence of gold price moves and systematic/CTA trading activity on platinum. However, platinum’s strong demand growth potential, from substituting for palladium for more cost-effective emissions reduction under tightening regulations and in decarbonising transport and heavy industry by in the growing green hydrogen economy, should provide investors with a strong incentive to continue to build platinum exposure from current levels.
Platinum Perspectives
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