The price of platinum is projected to rise this year to $1 038/oz, then decline to an average price of $862/oz, with palladium expected to reach a high of $1 168/oz and decline to an average price of $948/oz, forecasts 2017 London Bullion Market Association (LBMA) survey winner Glyn Stevens.

The LBMA hosts a yearly Precious Metals Forecast Survey, where Stevens took the prize for platinum in 2017 with a forecast of $935 against an actual average of $948.49.

“Following the usual New Year cheer, lower prices for the major platinum-group metals (PGMs) can be expected. However, going against historical precedent, palladium should remain the metal of choice throughout 2018,” he notes.

His forecast is based largely on the transition from petrol and diesel to electric and fuel cell vehicular transportation gaining momentum in 2017.

“With auto catalysts the major determinant of PGM demand, the effect on platinum and palladium prices will continue to be felt in 2018. Platinum will be especially hard hit as diesel’s image continues to deteriorate, owing to platinum being the metal of choice in diesel-powered vehicles,” notes Stevens, an independent analyst based in the UK.

He explains that petrol engines, which use mainly palladium to reduce harmful emissions, will remain the most popular choice for vehicles. However, hybrid and electric cars will keep gaining market share in the automotive sector, which will lead to a gradual decrease in demand for PGMs. This decreased demand for PGMs will, in turn, lead to lower PGM prices, he explains.

Any increased PGM demand, as a result of stricter emissions standards, should be more than counterbalanced by the accelerated recycling of hoarded spent catalysts, Stevens adds.

“As global industrial production in general stagnates, Chinese and European vehicle sales will level off, while those in the US and the developing world will decline further.”

Stevens says an oil-free future is still many years away and petroleum will remain a means of power for many years to come, but will one day be superseded by fossil-free fuels and green energy sources.

“If electric and fuel-cell-driven vehicles increase their market share and the automotive sector treads water at best, from where can PGMs take solace? The second-largest user, the jewellery sector, fails to impress, while rising US interest rates and a consequent firmer dollar should be a negative influence.”

It seems as if South African PGMs production is set to decline and Russia will continue to stockpile its palladium, but the overall supply and demand fundamentals seem destined to deteriorate, especially for platinum, adds Stevens.

“South Africa’s best bet remains gold. However, the yellow metal may not help in 2018, geopolitical catastrophes notwithstanding. “The recent and somewhat meteoric rise of the “insolubles” (iridium, rhodium and ruthenium) surely cannot be the answer,” he notes, concluding that, while PGM supply may decline, demand will deteriorate faster.