Despite resilience in the automotive, jewellery and industrial sectors, combined with reduced mining and recycling supply, there was a platinum surplus in the second quarter of 2022, according to the World Platinum Investment Council (WPIC).
In its Platinum Quarterly Report, WPIC said the platinum surplus rose by 349 000 ounces in the second quarter, while the forecast surplus for 2022 increased to 974 000 ounces.
Despite the surplus, physical market tightness continued throughout the second quarter and remained ongoing.
"The second quarter of 2022 saw the resurgence of exceptionally strong import volumes into China, significantly above identified demand," the WPIC said.
These excess imports into China, which were not captured in published supply and demand data, resulted in physical platinum market tightness.
The total platinum supply in 2022 is forecast to decline eight percent year-on-year to 7 514 000 ounces.
Mining supply in the second quarter of 2022 was down four percent, as an increase in Russian output – following a recovery from flooding in 2021 – offset year-on-year declines in all other producing countries,.
"The issues in the second quarter, combined with the depletion of semi-finished inventory that boosted refined volumes in 2021, will see total mine supply in 2022 decline seven percent, by 409 000 ounces year-on-year.“
WPIC chief executive Paul Wilson said: “The surplus we are forecasting for 2022 must be seen within the context of exceptionally strong imports of platinum into China, which are well above identified Chinese demand and were a feature once again in the second quarter of 2022.
“This additional ‘demand’ from China is not captured in our published demand data. The details of the split for this material between speculative and other demand segments are still yet to become clear; however, we anticipate that this will become more apparent over the next 12 months.”
He said the sustained high platinum lease rates that WPIC had been seeing throughout 2022 – the highest in ten years and higher even than those seen during the peak of the pandemic, when moving materials was extremely challenging – were a clear indication of shortages of physical metal in the market.
"Furthermore, this already tight market is underpinned by constrained mine and recycle supply, as shown in our published data," he said.
According to Wilson, platinum’s role in unlocking hydrogen’s crucial contribution to achieving global net zero targets was becoming widely known and offered an option to investors looking for exposure to this area. The drive in Europe to reduce gas imports from Russia, as well as the recent passing of the US’s Inflation Reduction Act, placed greater importance on the need for green hydrogen and provided further incentive for investment in the sector, which benefited platinum directly.
BUSINESS REPORT