The platinum market is currently facing a supply-demand imbalance, resulting in a deficit of 661,000 ounces in the first three quarters of the year. Despite this deficit, platinum prices have dropped by approximately 6%. This paradox can be attributed to the fabrication balance, which assesses supply against industrial and jewelry demand while excluding investment needs.
The overall fabrication deficit for the year is 307,000 ounces, with the first quarter alone accounting for a deficit of 336,000 ounces. The second quarter had a minor deficit of 5,000 ounces, while the third quarter experienced a surplus of 34,000 ounces.
Investment demand for platinum has weakened, particularly in the third quarter, where it fell by 226,000 ounces.
On the supply side, mine production has increased by 7% year-over-year to 1.48 million ounces in the third quarter, primarily due to a recovery in South African production.
Examining sector-specific demand trends, industrial usage of platinum increased by 15% year-over-year to 570,000 ounces, while demand in the automotive sector decreased by 3% year-over-year to 750,000 ounces. Jewelry demand, on the other hand, increased by 7% year-over-year to 480,000 ounces.
Looking ahead, both UBS and the World Platinum Investment Council (WPIC) predict a continued undersupply in the platinum market, with a projected deficit of 539,000 ounces for the upcoming year. This is due to the slower introduction of electric vehicles, which has maintained interest in traditional autocatalysts. Stakeholders in the platinum market will need to adapt to the evolving landscape, considering supply constraints, consumer preferences, and technological advancements.