This report incorporates analysis of platinum supply and demand during the second quarter of 2017.
- Overall supply is expected to contract further in 2017, due to closures of uneconomic mining at current market prices, with total platinum supply expected to decrease by 2% year-on-year to 7,795 koz. Secondary supply is forecast to slip by 3% when compared to 2016, with a reduction in jewellery recycling outweighing increased autocatalyst recycling.
- On the demand side of the equation, conditions remain lacklustre. Nevertheless, it is encouraging to observe the continued resilience of platinum demand from the automotive sector, which is counter to many negative commentaries on the sector. The full-year forecast for the segment is 3,360 koz, down just 2% on 2016 (3,435 koz) and very close to overall automotive demand in 2015 and 2014, despite a further reduction in diesel market share in Western Europe.
- The report shows that while diesel share in Europe continues to erode in the smaller and mid-sized vehicle segments, it remains robust and as high as ~80% in the larger, luxury and MPV (multi-purpose vehicle) segments. Application of mild hybrid technology can also re-assert diesel’s efficiency advantages over its gasoline counterparts, particularly with respect to CO2 emissions. An example of a diesel mild hybrid is Audi’s SQ7.
- Global platinum jewellery consumption is estimated to fall 1% to 2,590 koz in 2017, however, this masks significant changes in demand by country. The decline in demand from China this quarter was largely offset by increases in other regions, particularly in India and the U.S.
- Today’s data reaffirms the strong prospects for the Indian jewellery market, reflecting published data from Platinum Guild International (PGI), which recently reported that sales had accelerated by 48% year-on-year in Q2’17.
- Overall, industrial demand data was weak during the second quarter, down 65 koz to 400 koz. This fall was prompted by the timing of plant consolidation in petroleum refining. The report shows, however, that there was an increase in platinum demand for use in medical devices.
- Global investment demand came in at 90 koz in Q2’17, with bars and coins and exchange-traded funds (ETFs) seeing gains, while exchange stocks remain unchanged. This marks the sixth consecutive quarter of positive investment demand. Today’s data indicates that overall investment growth in 2017 is likely to be greater than expected, should the rate of growth observed in the first half of the year continue over the next two quarters.