Platinum Essentials

26 September 2024: Sep‘24, 2-5 year platinum supply/demand outlook: Robust demand and limited supply drive larger market deficits. September 2024 Platinum Essentials: Updating WPIC’s two- to five-year platinum supply demand outlook: Robust demand and limited supply drive larger market deficits. This Platinum Essentials contains revised platinum supply/demand estimates for 2025f to 2028f. The platinum investment case remains compelling, with the overriding feature being that the substantial market deficits of 2023 and 2024f are expected to persist throughout our forecast period to 2028f. This report is separate to the one-year forward outlook for 2024 we publish in our Platinum Quarterly (PQ), which is prepared independently for us by Metals Focus.

31 July 2024: The slowdown in BEV market growth is driving investor interest in platinum on a higher-for-longer ICE automotive thesis; are budget BEVs a threat to this outlook? Despite some future BEVs mooted to achieve €25,000 prices (or below), we do not expect these to lift overall declining BEV growth as they account for only 15% of new car listings in developed economies and are ultimately less cost-effective for a cohort of buyers that typically do not have access to cheaper at-home charging. This reports highlights that striving for an affordable price does not implicitly imply “price parity” with ICE/hybrid vehicles and that cumulatively 2E PGM automotive demand erosion of 1.4% CAGR between 2023 to 2028f will prove more resilient than many would have expected.

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29 May 2024: Updated palladium supply/demand outlook: Reduced supply and stronger near-term demand prolong larger deficits. In this Platinum Essentials we present our palladium supply/demand estimates for 2024 to 2028. Our analysis reaffirms an expectation that palladium markets will transition to sustained market surpluses, but timing is highly contingent upon the recovery of palladium recycling supply. Initially, we project tightening deficits for 2024 and 2025, moving to surpluses from 2026, driven by a significant increase in palladium recycling supply of over 1.3 Moz p.a. by 2028. The surplus is delayed by one year compared to our previous forecast, due to more resilient automotive demand and a slower-than-expected recovery in autocatalyst recycling. Any delays to solving these issues could easily slow the pace of the growth in recycling supply, resulting in deeper and more persistent deficits and further postpone the surplus.

30 April 2024: Unpacking the economics of the hydrogen economy reinforces conviction that platinum demand will benefit from a major new emerging end-market. WPIC expects hydrogen end-uses to account for 11% of total annual platinum demand by 2030 (~875 koz). Platinum’s largest opportunity within the hydrogen economy lies with fuel cell electric vehicles (FCEV), particularly heavy-duty. While initial FCEV adoption has been slow, the economic hurdles are receding with HD FCEVs projected to reach cost parity with diesel by 2030 in Europe and China. Accordingly, we expect that the HD FCEV market share will increase to 5% by 2030. This results in platinum demand growth from hydrogen end markets, which almost offsets declining autocatalyst demand leaving platinum markets in consecutive deficits of around 430 koz on average between 2025 to 2028.

1 April 2024: Hydrogen 101 – An introduction for investors. This 101 report unpacks and explains hydrogen and the hydrogen economy as well as the important role played by platinum in the production and use of hydrogen. Hydrogen serves as a versatile energy carrier, capable of being produced from renewable energy sources and applied across various mobility and industrial sectors to facilitate decarbonisation. Platinum and other PGMs are set to play a pivotal role through their inclusion in electrolysers and Proton Exchange Membrane (PEM) fuel cells. Recognising hydrogen's pivotal role in achieving net-zero emissions, its integration into various sectors is inevitable.

1 January 2024: Updating WPIC’s two- to five-year supply demand outlook. Multi-year deficits expected. With our Platinum Quarterly outlook now running through 2024, this Platinum Essentials contains revised platinum supply/demand estimates for 2025 to 2027 and our first estimate for 2028. In 2023, the platinum market is estimated to have recorded its largest single annual deficit of >1 Moz. Our analysis highlights that the platinum market will remain undersupplied through at least 2028. This report is separate to the one-year forward outlook for 2024 we publish in our Platinum Quarterly (PQ), which is prepared independently for us by Metals Focus.

1 December 2023: Platinum’s consecutive market deficits could deepen as lower PGM prices increase mine supply risks. The >40% decline in the Platinum Group Metals (PGMs) basket price over the last twelve months has materially undermined the economic sustainability of a significant portion of platinum mining supply. WPIC estimates around 25% of PGM mine production is generating negative margins. Should efforts to stem loss-making production result in production being suspended or closed, they will compound projected platinum market deficits, which are forecast to average 8% of demand between 2023f to 2027f, before capacity rationalisation. The combination of largely inelastic demand and risks to uneconomic supply being curtailed have the potential to exacerbate deficits and tighten market conditions, enhancing the investment case for platinum.

1 September 2023: Palladium’s five-year supply/demand outlook and its role in liberating platinum for the hydrogen economy. This report introduces WPIC’s five-year palladium outlook, supplementing our platinum projections to 2027. We forecast palladium deficits in 2023 and 2024 before increasing recycling supply and flat demand move palladium into surpluses from 2025. In contrast, we expect multi-year deficits for platinum from 2023. We expect ongoing platinum for palladium substitution in automotive end uses to reverse from 2025, supporting palladium demand and freeing up platinum for the hydrogen economy.

1 August 2023: Steady, strong growth in platinum chemical demand highlights the benefits of platinum’s diversity of end uses. This report examines the consistent growth in demand for platinum exhibited by the chemical sub-sector. Platinum chemical demand growth has outpaced global GDP growth suggesting increased appreciation for platinum’s role in improving process efficiency with lower energy use and higher yields. Parallels are drawn with broader platinum industrial demand (also outpacing GDP growth) which highlight benefits of having demand sources with different economic drivers. Reflecting on the diverse industrial end uses along with automotive, jewellery and investment demand, platinum demand is considered less variable than its sister metals. Accordingly, platinum is better insulated from broader market risks such as the electrification of the drivetrain while also being set to benefit from the hydrogen economy.

1 July 2023: Prioritising hybrid ICE technology would minimise life cycle CO₂ emissions and avoid a critical minerals shortage, versus the current “BEV first” strategy. This reports presents a scenario analysis of the evolution of the drivetrain and the associated critical mineral demand. Automaker prioritisation of pure Battery Electric Vehicle (BEV) production, will engender an imbalance between battery critical mineral efficiency and decarbonisation. A key conclusion is that in a critical mineral-constrained operating context, likely leading to a lithium shortage, versus BEVs, hybrids offer a better pathway to reducing average vehicle life-cycle emissions whilst maintaining supply demand balances within critical mineral markets.