The World Platinum Investment Council (WPIC) has today published its Platinum Quarterly for the third quarter of 2019, which includes a revision to the full-year 2019 forecast as well as an initial forecast for 2020.
The platinum market is forecast to be in balance for this year as the updated 2019 forecast now reflects a deficit of 30 koz compared to the prior estimate of a surplus of 345 koz. The substantial 12% increase in total demand is driven by record ETF buying, which more than offsets expected demand decreases in the automotive (-5%), jewellery (-6%) and industrial (-1%) segments and total supply growth of 2% for full-year 2019.
Mining supply is up 1% as some mining projects ramp up, although this is mostly due to the refining of metal built up in the processing pipeline in 2018. Significant increases in the price of palladium and rhodium helped lift platinum recycling 3% but the low platinum price for most of 2019 led to lower jewellery recycling.
The initial forecast for 2020 projects a market surplus of 670 koz, reflecting a 1% decrease in supply and a 10% decrease in demand, predominantly due to lower investment demand that, although forecast to be well above the five year average, is not expected to include a repeat of this year’s record ETF buying. Mine supply is expected to be 2% lower than in 2018.
Q3 2019
Platinum supply and demand in Q3’19 was near balance with total supply down 8% and total demand up 7%. The typical seasonal large surplus expected in the third quarter of each year fell to a small surplus of 25 koz in Q3’19. This was due to the year-on-year fall in mining supply of 11%, that more than offset the 2% rise in recycle supply, and a 7% rise in total demand. The supply fall was primarily due to smelter maintenance in South Africa and demand was up due to continued strong investment demand in the quarter.
In China initiatives launched through the WPIC Shanghai office continue to increase significantly the awareness and ownership of platinum as an investment asset. WPIC collaboration and partnerships with large and prestigious Chinese organizations such as Bank of China, Agricultural Bank of China and China Gold Association is raising public and institutional awareness of how to invest in platinum despite some infrastructure challenges. There are now four of our partners producing and selling platinum bars in China; enhancing retail availability and choice. We have a strong pipeline of new partners and products that will assist in enhanced awareness and distribution of platinum in China in 2020 and beyond.