Deficit Highlights
The World Platinum Investment Council (WPIC) has reported a substantial supply deficit in the platinum market for 2024, projected at one million ounces. This follows a shortfall of 731,000 ounces in 2023. Despite these deficits being the largest in over a decade, platinum prices remain under pressure, with October futures recently trading at $944.20 per ounce, down 0.30% on the day.
Investor and Jewelry Demand Surge
Interestingly, investment demand for platinum has surged, with a notable increase of 462,000 ounces in the second quarter of 2024, up from 117,000 ounces in the first quarter. This rise is largely attributed to a significant inflow of 444,000 ounces into platinum ETFs and strong physical investment in China. The WPIC anticipates a 15% rise in investment demand for the year, totaling 517,000 ounces.
Jewelry demand has also seen growth, reaching 501,000 ounces in Q2, a 7% increase from the previous year. The report projects platinum jewelry demand to hit 1,994,000 ounces for the full year, driven by historically high gold prices and strong growth in markets like India, Japan, Europe, and North America.
Industrial Demand and Supply Constraints
Industrial demand for platinum rose slightly to 638,000 ounces in Q2, up from 627,000 ounces in Q1. This includes a 48% year-on-year increase in glass demand, driven by Chinese LCD capacity expansions. Automotive platinum demand remained stable at 820,000 ounces but is forecasted to reach a seven-year high of 3,237,000 ounces in 2024.
On the supply side, the WPIC expects a 1% decline in total platinum supply for 2024, down to 7,089,000 ounces. Recycled supply is projected to increase by 2% to 1,581,000 ounces, but this will be offset by a 2% decrease in mined supply, expected to fall to 5,508,000 ounces.
Market Outlook
WPIC Director of Research Edward Sterck highlighted that despite rising demand, the lack of new investments in production and ongoing supply constraints will likely continue to drive deficits in the platinum market. This ongoing imbalance between supply and demand is expected to support platinum prices in the long run, despite current pressures.
Overall, the combination of strong investment and jewelry demand, coupled with supply shortages, suggests that the platinum market will remain tight, potentially influencing future price movements.
