January 2022 Platinum Essentials: Industrial demand for platinum can be highly variable on a short-term basis, due to steady top-up demand being intermittently boosted by capacity expansion demand: Industrial demand for platinum has grown at twice the pace of global GDP since 2013 and since 2020 has been second largest demand segment after automotive. Despite its importance, industrial demand is often overlooked analytically due to fragmented end uses and the high variability in published demand over the short term. This report highlights that the variability in industrial demand for platinum is a result of industrial demand being published ‘net’ of closed-loop or ‘internal’ recycling. Industrial facilities that use platinum typically require significant up-front loadings when a plant is built or expanded, after which only small top-ups are needed to off-set losses during plant operation. Consequently, most industrial demand comprises steady on-going top-up demand, supplemented by staccato periods of extra demand due to capacity expansions, or, more rarely, recycling supply from the closure of facilities.
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World Platinum Investment Council
In this edition of Platinum Essentials, we present Above Ground Stocks (AGS) for platinum, including an analysis of estimating AGS and a comparison with AGS estimates of palladium and rhodium. AGS are a natural part of physical metal markets. However, methodologies for calculating annual supply demand balances vary across different data providers, with the result that AGS definitions and therefore estimates can vary significantly. In comparison to other PGMs, platinum AGS appear relatively benign compared to current and potential future annual platinum demand.
In this edition of Platinum Essentials, we present a detailed analysis of the palladium market to provide a framework for platinum investors and others interested in the palladium market. The high price of palladium relative to platinum is positive for platinum demand as palladium substitution by platinum in automotive catalysis is the likely mechanism that will drive market rebalancing.
Our latest Platinum Essentials explores whether the emergence of cryptocurrencies is relevant to the investment case for platinum.