The World Platinum Investment Council (WPIC) announced an anticipated more significant global platinum deficit for 2024 than previously predicted, with a shortfall projection of 476,000 troy ounces. This surge in the platinum deficit is attributed to increased demand from the automotive sector, global mining slowdowns, current geopolitical issues, and economic instability disrupting platinum supply chains.
Decreased production from mines in South Africa and Russia, along with a rise in global platinum demand from industries such as automotive, jewelry, and electronics, has led to a scarcity in the market. Strikes in major production countries and chronic under-investment in mining infrastructure also contribute to this issue.
According to Edward Sterck, a lead researcher at WPIC, this marks the second consecutive year of platinum undersupply, expected to amount to 6% of total demand in 2024.
Intensifying global platinum deficit by 2024
He highlighted the role of increasing demand and decreasing production in this undersupply condition, with striking issues in platinum-rich countries also decreasing supply.
Platinum production in South Africa is on track to decline by 2% this year due to slower production growth, ongoing mine restructuring, and falling palladium and rhodium prices. Similarly, in Russia, the platinum supply is projected to plummet by 9%, hitting a historic low due to scheduled smelter maintenance in 2024 and the extended repercussions of Western sanctions.
While demand for platinum is projected to decrease by 5% in 2024, the automotive sector anticipates a 2% increase due to slow battery-operated vehicle adoption rates, stricter emissions regulations, and shifting from palladium to platinum. Conversely, amid economic uncertainties, the jewelry industry expects a 3% decline due to reduced consumer spending.
Above-ground platinum supplies used to offset the deficit are set to drop by 12% after a significant decrease of 17% in 2023, dropping to a four-year low of 3.620 million ounces. This presents a challenging outlook for the platinum-dependent industries, positioning platinum prices for a potential rise unless new sources of platinum supply are discovered or dramatic increases in recycling rates occur.
