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Pgm Market Report: May 2020

Our report reviewing supply and demand for platinum group metals.

18th May 2020
Outlook
  • Pgm supply and demand will be severely impacted by the COVID-19 pandemic.
  • South African supplies are forecast to fall by at least 20%, while the collection of secondary materials will also be severely disrupted.
  • Autocatalyst demand will contract sharply on temporary plant closures, weak consumer demand and increased thrifting.
  • Industrial consumption will fall overall, but with significant variation between applications and regions.
  • Platinum lease rates rose sharply in March due to heavy buying by Chinese industrial consumers and Japanese investors.
  • Jewellery distributors also bought into low prices, but full-year jewellery demand will drop sharply.

 

Platinum 2019 chapter
  • The platinum market moved into deficit in 2019, with resurgent investment demand adding over one million ounces to ETF holdings.
  • Platinum use in autocatalysts declined 5%, as higher average loadings partly offset an 11% fall in world diesel car output.
  • Weakness in the Chinese jewellery sector intensified, due to further market share losses to gold.
  • Industrial demand fell below 2018’s record level but was supported by large capacity expansions in China.
  • Auto scrap volumes rose strongly, but pgm recoveries were affected by longer processing lead-times.
  • Primary supplies fell slightly, with more shaft closures in South Africa and some disruption due to electricity shortages.

 

Palladium 2019 chapter
  • The palladium price set a series of all-time highs in 2019, as the deficit widened to nearly one million ounces.
  • Auto demand set a new record, despite lower vehicle output, as global average loadings rose by 14%.
  • Industrial demand fell, with the electronics sector hit by weaker economic growth, and some thrifting in dental alloys.
  • ETF redemptions slowed, and the final quarter of 2019 saw a modest return to positive investment.
  • Primary supplies were broadly flat, but secondary recoveries rose 10% despite capacity constraints and rising lead-times.

 

Rhodium 2019 chapter
  • Rhodium moved into deficit in 2019, with auto demand up 14% and primary supplies flat.
  • Market liquidity tightened dramatically, as automakers sought to secure their future rhodium needs.
  • Metal availability was inconsistent, due to electricity shortages in South Africa and capacity issues in secondary refineries.
  • Exceptionally tight market conditions propelled the price to $6,000 in December 2019 and to all-time highs in early 2020.


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