By Peter Hobson
LONDON (Reuters) - The global platinum market was hugely oversupplied in 2021, the World Platinum Investment Council (WPIC) said on Wednesday as it predicted another large surplus of the metal this year.
Platinum is used alongside palladium and rhodium to neutralise exhaust emissions in cars, as well as in industries such as glassmaking, for jewellery and as an investment.
"We've got the largest surplus we've ever recorded yet the market remains pretty tight," Trevor Raymond, the WPIC's head of research, said.
Raymond said a huge rise in palladium prices triggered by the conflict in Ukraine could make automakers switch more rapidly to cheaper platinum to save money, boosting demand.
Russia accounts for 25-30% of the world's palladium supply and 7-10% of its platinum.
Uncertainty over Russian exports has pushed palladium prices to record highs above $3,000 an ounce. Platinum prices have risen less dramatically to around $1,170 an ounce.
The WPIC said the roughly 8 million ounce a year market was oversupplied by 1.23 million ounces in 2021 and predicted a surplus of 652,000 ounces in 2022.
It said supply of platinum rose by 21% last year, while demand fell 9%.
But huge imports of platinum into China, much of it by speculators taking advantage of relatively low prices, consumed the market surplus in 2021, the WPIC said.
The council said platinum supply should fall 1% in 2022 as a backlog of semi-processed material in South Africa runs out.
It said it expected demand, which dropped last year as a sharp fall in purchases by investors more than offset higher consumption by industry and jewellers, to rise by 7% in 2022.
Higher loadings of platinum in heavy duty vehicles in China and substitution of palladium for platinum lifted demand from the auto sector despite lower vehicle output due to a chip shortage, the council said.
Following are supply and demand numbers and comparisons.
ANNUAL PLATINUM SUPPLY/DEMAND ('000 oz)*
2020 2021 2022f 2021/ 2022f
2020 /2021
% %
SUPPLY
Mining Supply 4,906 6,258 6,119 28% -2%
Recycling 1,926 1,984 2,063 3% 4%
Total Supply 6,832 8,242 8,182 21% -1%
DEMAND
Automotive 2,370 2,621 3,129 11% 19%
Jewellery 1,820 1,915 1,940 5% 1%
Industrial 1,982 2,519 2,132 27% -15%
- of which chemical 596 684 632 15% -8%
- Petroleum 109 182 194 68% 6%
- Electrical 130 135 135 4% 0%
- Glass 407 715 331 75% -54%
- Medical 239 247 251 4% 1%
- Other 500 555 588 11% 6%
Investment 1,546 -43 329 N/A N/A
- Bars, Coins 578 332 429 -43% 29%
- ETF Holdings 509 -237 50 N/A N/A
- Exchange Stocks 458 -139 -150 N/A N/A
Total Demand 7,718 7,010 7,530 -9% 7%
Balance -886 1,232 652 N/A -47%
Above Ground Stocks 2,677 3,908 4,560 46% 17%
QUARTERLY PLATINUM SUPPLY/DEMAND ('000 oz)*
Q4 2020 Q3 2021 Q4 2021 Q4/Q3 Q4/Q4
% %
SUPPLY
Total Mining Supply 1,252 1,565 1,674 7% 34%
Recycling 573 463 461 0% -20%
Total Supply 1,825 2,027 2,135 5% 17%
DEMAND
Automotive 712 582 656 13% -8%
Jewellery 529 481 497 3% -6%
Industrial 525 596 615 3% 17%
- of which chemical 178 156 199 27% 12%
- Petroleum 36 46 54 18% 51%
- Electrical 36 35 32 -9% -11%
- Glass 73 164 121 -26% 66%
- Medical 60 64 61 -4% 3%
- Other 143 132 147 12% 3%
Investment 135 -282 -108 -62% -180%
- Bars, Coins 60 110 95 -14% 58%
- ETF Holdings 76 -219 -155 -29% -303%
- Exchange Stocks -1 -173 -48 -72% 5414%
Total Demand 1,901 1,377 1,660 21% -13%
Balance -76 650 475 -27% -723%
* Source: World Platinum Investment Council, Platinum Quarterly Q4 2021