Meeting platinum demand
However, because of platinum’s fungibility, sponge can also be made into ingots, and vice versa, without any loss of intrinsic value per ounce or gram. This is useful in terms of managing the diverse needs of the industrial, automotive, jewellery and investment segments of platinum demand. While it is possible for a refiner to convert platinum between sponge and ingot form, in practice it is usually swapped as, although not meeting LPPM Good Delivery Standards, assaying ensures the purity of the platinum sponge at 99.95 per cent.
Where refining capacity is constrained and there is not time to convert platinum from one form to another, this type of swap may attract a premium over the cost of conversion. This is known as the sponge/ingot premium or discount, usually only present during periods where the one form of platinum is more in demand than the other.
The first half of 2019 has seen unprecedented investment demand of 855 koz, with 720 koz coming from increased ETF holdings and 135 koz from purchases of bars and coins, while automotive demand for platinum during the first half of 2019 was 765 koz.
For investors, ETFs offer an affordable way to accumulate an investment in platinum, enhancing diversification and adding a physically-backed asset to a portfolio.