Platinum industrial demand has exhibited strong growth in recent years, at a compound annual growth rate (CAGR) of 6% between 2013 and 2019.
The World Platinum Investment Council (WPIC) says this is significantly above the CAGR of two key industrial benchmarks, being more than double that of global gross domestic product, and triple that of industrial production as measured by the Organisation for Economic Cooperation and Development, over the same period.
The council estimates platinum industrial demand will account for almost 40% of total platinum demand, net of recycling supply, this year.
Unlike automotive and jewellery demand, consumption of platinum in industrial applications is usually expressed on a net basis, that is the gross demand less the supply of ‘closed-loop’ recycled metal.
As economic activity driving platinum’s industrial uses recovers, forecasts indicate that it will rebound by 25% year-on-year to 2.4-million ounces.
Significantly, this is also 13% higher than demand in 2019.
China continues to be a major contributor to platinum’s industrial growth, says the WPIC. For example, Chinese petroleum refining capacity has almost tripled over the last 20 years to keep pace with the rapid growth in domestic energy demand.
“The ambition for self-sufficiency in petrochemicals, a key part of China’s long-term social and economic policies, has seen strong demand for platinum catalysts in not only petroleum refining but also in the production of bulk chemicals such as paraxylene, propylene and hydrogen peroxide.
“Globally, demand for platinum in the chemical and petroleum sectors is expected to recover well this year, rising by 11% and 65%, respectively, after the pandemic-related curtailment of activity in 2020,” the council explains.
Aside from the petrochemical industries, platinum has a multitude of well-established other end-use segments including glass manufacture, medical and electrical.
Platinum demand across its industrial uses arises from three main categories: industrial catalysts, including manufacturing silicones and the production of nitric acid as a feedstock for fertiliser; platinum components, such as those used in medical devices (stents, pacemakers, neuromodulation devices) or sensors; and relatively small top-up requirements as industrial catalysts and manufacturing equipment wear out, with much larger amounts of metal required when new process plant capacity is built.
Some new capacity build-out in the glass sector planned for 2020, which has been delayed owing to the pandemic, is being added to the capacity expansion already planned for this year, resulting in a major increase in demand this year, up by 70%, or 260 000 oz.
WPIC notes platinum’s diverse industrial uses leave it well-positioned to benefit from economic growth as the world recovers from the effects of the Covid-19 pandemic.
As economic activity steps up, assisted by large-scale government stimulus funding, investors are recognising an increased need for commodities, including industrial metals, and are acting on the upside this brings to the investment case for platinum.
So far this year, investors in North America and Europe alone have increased their holdings in physically-backed platinum exchange traded funds by over 200 000 oz.