This year is shaping up to be another strong year for London-based World Platinum Investment Council’s (WPIC’s) market development efforts, with several new partnerships agreed to and existing agreements flourishing, says WPIC research director Trevor Raymond.
South Africa is the world’s largest platinum producer and the WPIC is working with the South African Mint to support their platinum coin efforts.
“We’ve done research with [the South African Mint] and are very pleased that it issued a limited-edition platinum proof-coin in 2017,” he enthuses, adding that the WPIC will continue to work with the Mint to encourage production of a platinum bullion coin.
Mining Weekly reported in June 2017 that the South African Reserve Bank had no intention of mandating the South African Mint to produce such a coin, as feasibility studies had shown the concept to be unviable.
However, Raymond notes that the WPIC has made good progress with partnerships to increase the availability of platinum coins around the world, with the Royal Mint issuing a platinum bullion coin in 2017 for the first time.
The WPIC was established in 2014 to increase global investments in platinum as an investment asset (through bars and coins, for example), as well as exchange-traded products backed by physical platinum.
Moreover, Raymond highlights to Mining Weekly that the WPIC’s partnership with online investment service BullionVault saw the successful addition of platinum to the BullionVault platform, with more than 12 000 oz of platinum vaulted since the launch in March 2017.
In September last year, Mining Weekly reported that an increasing number of investors were using BullionVault’s service to add vaulted platinum to existing gold and silver bar holdings. About 5 000 oz of platinum demand came from BullionVault at that stage, according to the WPIC’s Platinum Quarterly report, which includes an analysis of global platinum supply and demand for each quarter of 2017 and the full year.
Supply and Demand
The WPIC forecast for 2018 shows that global platinum demand will grow by 2% to about eight-million ounces, helped by a strong recovery in industrial demand to more typical levels, as well as jewellery posting a modest growth in demand.
“There are a number of promising signs of growth visible on the demand side of the fundamental platinum equation, but the supply side continues to show signs of tightening. In 2018, South African production is expected to fall a further 2%, compared with that of 2017, as the impact of announced mine closures takes effect,” Raymond explains.
However, Raymond notes that the total global platinum supply is forecast to slip by 1% to about 7.7-million ounces next year as a lower primary supply outweighs a gain in recycled metal.
“While recycling supply is predicted to increase in 2018, the extent to which a growth trajectory can be maintained is not clear cut. Increasingly complex silicon carbide substrate auto catalysts are making it tougher for refiners to recover the platinum.”
The WPIC forecast shows that the first increase in global jewellery demand for four years will take place this year, with a growth of 3% (about 65 000 oz) to roughly 2.6-million ounces. This is owing to double-digit growth in the rapidly expanding Indian market, with demand from China currently expected to stabilise.
Industrial demand for platinum in 2018 is expected to surge by 9%, with global automotive platinum demand expected to remain firm this year, as automotive demand of 3.365-million ounces in 2017 is expected to decrease by 1% to 3.335-million ounces in 2018.
However, he says there is increasing anecdotal evidence that automakers in the US and Europe are actively considering switching from palladium to platinum loadings on petrol vehicles, which will likely have a considerable impact on short to medium-term platinum demand, should it come to fruition.
“While the market assumes that such switching will be meaningful only in three years’ time, we [the WPIC] believe that the impact could be felt much sooner. We believe that just a small amount of switching out of palladium into platinum could have a significant impact on buying behaviour and, subsequently, on platinum demand in the near term,” he avers.
Raymond notes that the recent increased interest in battery electric vehicles (EVs) has elevated public and investor awareness of how well-suited fuel cell EVs are to support efforts to reduce carbon dioxide emissions from the global car fleet.
“Consumers have become aware that the EV platform and its excellent performance are almost identical in a battery and a fuel cell vehicle with the latter benefiting from quick refuelling and range similar to existing cars. While the challenges associated with battery recharging infrastructure are often glossed over, they are similar and, in some cases, greater than a hydrogen refuelling infrastructure. This bodes well for the medium-term demand for platinum.”
While the WPIC cannot comment on producers and how they may respond to challenges, Raymond concludes that the organisation will continue to present the case for platinum as an investment asset to an increasing number of investors around the world and work on a range of projects with partners to increase the choice of platinum investment products available to meet investor needs.