This report incorporates analysis of platinum supply and demand during the fourth quarter and full year 2022, and an updated forecast for 2023.
After two years of significant surpluses the platinum market is forecast to move to a material deficit in 2023. The change from the 776 koz surplus in 2022 to the forecast deficit of 556 koz in 2023 is over 1.3 Moz. This reflects total supply remaining close to the weak level in 2022, up only 3% to 7,428 koz (+201 koz), and strong demand growth of 24% to 7,985 koz (+1,534 koz).
Total supply was down in both Q4’22 (-18% year-on-year to 1,739 koz) and full year 2022 (-12% to 7,227 koz), as prevailing headwinds in both mining and recycling supply severely curtailed output.
For 2022, total mining supply declined 11% year-on-year (-659 koz) and is forecast to remain broadly flat in 2023 (+28 koz). Refined mine production in 2022 also declined 11% year-on-year (-718 koz) almost entirely due to lower output from South Africa. Output here declined 24% (-300 koz) year-on-year in Q4’22 as a result of smelter maintenance, operational challenges, and the impact of the country’s well-documented electricity supply issues. Meanwhile, Russian production in Q4’22 declined 10% (-18 koz) year-on-year due to logistical challenges impacting the flow of material between Russian and Finnish processing facilities.
Global recycling in 2022 fell 17% year-on-year (-349 koz) on reduced availability of end-of-life vehicles and lower jewellery recycling. Autocatalyst recycling declined as a result of new vehicles’ low availability meaning cars are being driven for longer. This was compounded by changes in consumer behaviour as a result of cost-of-living concerns and lower mileage due to remote working. Jewellery recycling was down, primarily due to slower jewellery sales in China impacting sell-backs. Global recycling is expected to recover by 10% in 2023 to 1,856 koz, driven by an increase in the availability of spent autocatalysts, with autocatalyst recycling forecast to recover by 12% to 1,391 koz.
Automotive demand growth trajectory continues into 2023
The global automotive market remained on an improving path during much of last year, showing resilience despite the lingering chip shortage, cost-of-living concerns, the impact of the Russia- Ukraine war, and the severe lockdown in China. Automotive demand for full year 2022 increased by 12% year-on-year (+311 koz), reaching 2,957 koz. Despite vehicle production remaining short of pre-pandemic levels, a combination of factors is boosting platinum automotive demand growth. Firstly, in 2022, there was a 28% increase in the manufacture of hybrid vehicles, which typically require higher loadings in the aftertreatment system. Secondly, tighter emissions legislation, particularly in China, also resulted in higher loadings (especially in heavy-duty diesel vehicles). Lastly, there was growing platinum for palladium substitution, and, significantly, the increase has meant an upward revision to the substitution estimate by close to 100 koz, to 540 koz for 2023. With these trends set to continue, global automotive demand is expected to increase by 10% in 2023 to 3,246 koz (+288 koz).
Industrial demand in 2023 forecast to match the strongest on record
Industrial demand for platinum is expected to be an area of stand-out strength in 2023, up 12% year-on-year to 2,505 koz (+262 koz), and just 26 koz below the level in 2021, the strongest year on record. This strong demand growth will be driven by the construction of new LCD capacity installations in Japan and from China’s project pipeline as the country’s COVID-19 restrictions ease. Within the glass industry, platinum demand will increase by 55% to 737 koz, offsetting modest declines forecast in the chemical (-2%), petroleum (-4%) and electronics (-6%) sectors.
Jewellery demand set to increase as restrictions in China ease
With China, the largest platinum jewellery market, in lockdown for much of 2022, jewellery demand declined by 3% (-59 koz) to 1,894 koz for full year 2022. As restrictions ease, and consumer confidence returns, 2023 is forecast to see a 15% (+73 koz) demand increase in China. Growth is also expected in Japan and in India. Meanwhile, declines are anticipated in Europe and North America on account of fewer weddings and recessionary fears. In all, global jewellery demand is expected to improve by 2% (+42 koz), growing to 1,936 koz in 2023.
Investment demand recovery forecast in 2023 – improving by over 900 koz
Investment demand is expected to improve significantly in 2023. Platinum bar and coin demand is forecast to jump by 100% to 450 koz in 2023, a three-year high, reflecting improved product availability in North America and Europe and net disinvestment in Japan swinging to net investment. Meanwhile, outflows in ETFs (-132 koz) and exchange stocks (-20 koz) will continue to slow, with some renewed interest in South Africa for platinum ETFs in preference to mining equities. The result will mean net investment demand of 298 koz in 2023.