The World Platinum Investment Council (WPIC) has recently warned that the global platinum shortfall in 2024 may be more extreme than initially expected. This warning stems from decreasing mining outputs in key platinum producing countries: South Africa and Russia.
The WPIC has suggested that even extensive recycling operations would be unable to adequately address this deficit, which could significantly disrupt industries including automotive, jewelry, and electronics that rely heavily on platinum. Economic instability in both South Africa and Russia is further compounding the issue, interrupting consistency in production and exports.
Even though the predicted platinum deficit of 476,000 troy ounces in 2024 is a reduction from 2023’s 851,000 ounces, the WPIC attributes this to a 5% decrease in demand, rather than an increase in production. Various influencing factors such as reduced consumer purchasing power and slowed industrial usage contribute to this decline in demand. Despite this slight improvement in the deficit forecast, the impacts remain significant.
Edward Sterck, the head researcher at WPIC, has added to these concerns, revealing that 2024’s shortage will mark the second consecutive year. The projected shortage will account for approximately 6% of the total annual demand.
Anticipating deepened platinum shortage in 2024
Sterck also notes that the predicted supply of platinum for 2024 is expected to match the 2020 low.
Challenges in platinum production are primarily due to ongoing restructures and unexpected underperformance. Furthermore, decreased palladium and rhodium prices will likely result in a 2% output reduction from South African Mines. Russia also faces a projected 9% decline in platinum production, largely as a result of Western sanctions and scheduled smelter maintenance in 2024.
Despite the seemingly gloomy forecast, some optimism can be found in the North American region, which is expected to maintain a steady platinum production. Additionally, there is potential for increased recycled platinum supplies to counteract the declining production levels, although this will require significant capital investment and come with its own challenges.
There is also an expected drop by 5% in platinum demand to reach 7.587 million ounces in 2024, following a 26% rise in 2023. However, this may be moderated by increased demand in the auto industry, expected to increase by 2% due to a shift in preferences for heavy-duty and hybrid vehicles, stricter emission regulations, and an increased preference for platinum over palladium.
To mitigate the ongoing deficit, above-ground platinum inventories are predicted to decrease by 12%, following a 17% reduction in 2023. This would result in a four-year low of 3.620 million ounces. Despite producers expanding output to counteract the shortage, the consistent demand continues to make equilibrium between supply and demand a pressing issue.
