In recent news, the World Platinum Investment Council (WPIC) has revised its 2024 deficit outlook for the platinum market. The new forecast now stands at a staggering 476,000 ounces, marking a sharp upswing from earlier predictions. This revision indicates a higher deficit, signaling that demand for platinum will outstrip supply.
One could ask why the prediction is increasing rather than decreasing, despite the ongoing development and production ventures in the platinum industry. The primary explanation for this lies in the predicted demand surge outweighing the service capacity of the existing and future production projects.
Given platinum’s versatility and wide range of applications, the hike in demand is hardly surprising. In essence, platinum is used across various industries such as jewellery, automotive, medical, and electronics. More recently, platinum has also emerged as a critical element in the renewable energy sector, particularly the manufacturing of hydrogen fuel cells.
The automotive industry, in particular, has seen a notable resurgence in demand following the pandemic-related downturn. Primarily, the demand comes from the necessity of platinum in vehicle catalytic converters that help reduce harmful emissions. This global recovery of the vehicle manufacturing sector is one key driver of the projected platinum deficit.
Furthermore, the emergence of the renewable energy sector, predominantly hydrogen fuel cells, has created a significant new demand source for platinum. Platinum plays a critical role in these fuel cells’ operation, acting as a catalyst in the chemical reaction that produces electricity. With more countries focusing on renewable energy sources as part of their goals to combat climate change, the usage of platinum in this sector is expected to escalate.
On the supply side, there are also challenges that contribute to the forecasted deficit. Platinum mining, predominantly concentrated in South Africa, has faced numerous setbacks, ranging from labor disputes, electricity shortages to deep-level mining safety concerns. These challenges, coupled with the time and capital-intensive nature of bringing new mines into operation, contribute to an inability to meet the rapidly rising demand.
Often overlooked is the role recycling plays within the platinum market. While the reclaimed platinum from recycled catalytic converters and electronic devices does contribute to the supply, it often fluctuates based on scrap availability and economic viability. As such, the uncertainty of recycled platinum’s contribution further complicates predictions about deficit levels.
Implications of this heightened deficit projection can resonate across multiple dimensions. Price volatility is one of the primary outcomes, with the potential to significantly impact investors, end-users, and even countries that heavily rely on platinum exports. Furthermore, the gap between supply and demand could spur richer investment into platinum mining and recycling, fostering innovation and increased efficiency within these sectors.
In summary, the World Platinum Investment Council’s revised prediction of a 476,000-ounce deficit in platinum supplies by 2024 highlights the escalating global demand and complex supply challenges. It shines a light on the essential role of platinum in emerging technology sectors, particularly those addressing climate change. Reconnoitering new extraction technologies, improving mining techniques, and investing in recycling technologies would be pivotal in overcoming this deficit. The support from governmental policies around the world also remains a key determinant as the world continues its pursuit of a greener future.
