The platinum market is currently facing a deficit, with a recorded shortfall of 661,000 ounces in the first three quarters of 2023. Surprisingly, prices have decreased by approximately 6%.
This can be attributed to the fabrication balance, which evaluates supply against industrial and jewelry demand while excluding investment needs. The fabrication deficit for the year was 307,000 ounces, with a substantial deficit of 336,000 ounces in the first quarter, a minor deficit of 5,000 ounces in the second quarter, and a surplus of 34,000 ounces in the third quarter.
Investment demand for platinum has weakened, particularly in the third quarter, where it fell by 226,000 ounces. This decline may be linked to deteriorating market fundamentals.
On the supply side, mine supply has increased by 7% year-on-year, totaling 1.48 million ounces in the third quarter, primarily due to a recovery in South African production. Industrial usage of platinum has increased by 15% year-on-year, reaching 570,000 ounces. However, the glass sector has reported weak demand in the third quarter. The automotive sector has also faced challenges, with a 3% year-on-year decline in demand to 750,000 ounces, largely due to a sluggish European market.
On a positive note, jewelry demand has increased by 7% year-on-year to 480,000 ounces.
Looking ahead, both UBS and the World Platinum Investment Council (WPIC) predict a sustained undersupply in the platinum market. The WPIC forecasts a deficit of 539,000 ounces for the upcoming year. UBS also indicates that the market is likely to remain undersupplied in 2025, with slower adoption rates of electric vehicles contributing to ongoing demand for autocatalysts. The current popularity of hybrid vehicles further complicates the outlook for platinum demand.
In summary, the platinum market is currently experiencing a supply deficit and fluctuating demand across various sectors. Stakeholders in the market will need to navigate the evolving landscape of automotive technology and changing consumer behaviors.