Global Courant 2023-05-02 20:04:54
Main image: Singapore Bullion Market Association
Platinum prices have risen as investors anticipate supply shortages due to power outages at South African mines and increased demand from the automotive and hydrogen industries. Prices rose from just over $900 an ounce in late February to a high of $1,132.17 on April 21, the highest in more than a year, before dropping to around $1,050 on Tuesday.
Platinum is used in the automotive industry, as well as other industries and jewelry, to neutralize harmful engine emissions. A number of factors have contributed to the recent price increase, including increased demand from the automotive industry, the largest consumer of platinum. As auto production ramps up, StoneX analyst Rhona O’Connell predicts an 8% increase in auto industry demand this year.
Investors are also betting on the hydrogen industry, which is seen as a potential driver of future platinum demand. Producing and using hydrogen requires large amounts of platinum, and many investors believe this will lead to increased demand for the metal in the coming years.
However, some analysts have expressed concern that the growth of the hydrogen industry may take longer than expected. According to Macquarie analysts, the industry will account for about 220,000 ounces of demand in 2030, but will approach 2 million ounces by 2040.
Despite the bullish sentiment, there are some concerns about the platinum supply. South Africa produces 70-75% of the world’s mined platinum supply, and South African miners have warned that progressive blackouts this year could reduce output by 5-15%. This, in combination with possible setbacks in Russian production, could lead to supply shortages and price increases.
According to Standard Chartered analyst Suki Cooper, the platinum market is already showing the first signs of serial shortages. Cooper warned that prices could fall in the near term before supply concerns deepen later in the year.
In recent weeks, exchange-traded funds (ETFs) that hold platinum for their shareholders have also been buying large amounts of the metal. The World Platinum Investment Council (WPIC), which tracks these funds, reported that ETFs bought about 120,000 ounces of platinum in a matter of days at the end of April.
This year, the WPIC forecasts a shortfall of about 500,000 ounces in the platinum market of about 8 million ounces per year, while O’Connell forecasts a shortfall of 900,000 ounces. As investors scramble to secure supplies, these shortfalls could put additional upward pressure on prices.
Finally, the platinum market is experiencing strong demand from the auto and hydrogen industries, as well as ETFs, which buy large amounts of the metal. Concerns over platinum supply remain, however, with South African mines warning of possible production cuts due to power outages. This, in combination with possible setbacks in Russian production, could lead to supply shortages and price increases. As a result, investors will be watching the market closely in the coming months for signs of further price increases.
