Platinum Market Deficit Continues Despite Declining Prices
The platinum market has seen a deficit of 661,000 ounces in the first three quarters of the year, leading to a decrease in prices by approximately 6%. This unexpected trend is mainly due to the fabrication balance, which compares supply to industrial and jewelry demand, excluding investment needs.
Throughout the year, the fabrication deficit reached 307,000 ounces, with a significant deficit of 336,000 ounces in the first quarter, a minor 5,000-ounce deficit in the second quarter, and a surplus of 34,000 ounces in the third quarter. Investment demand for platinum also weakened in the third quarter, dropping by 226,000 ounces, possibly influenced by deteriorating market fundamentals.
Despite the deficit, mine supply increased by 7% year-over-year to 1.48 million ounces in the third quarter, primarily driven by a recovery in South African production. On the demand side, industrial usage rose by 15% year-over-year to 570,000 ounces, with weak demand in the glass sector. Automotive demand decreased by 3% year-over-year to 750,000 ounces, impacted by a sluggish European market. However, jewelry demand saw a positive growth of 7% year-over-year to 480,000 ounces.
According to the World Platinum Investment Council (WPIC), both UBS and WPIC project a continued undersupply in the platinum market, with a forecasted deficit of 539,000 ounces for the next year. UBS predicts a sustained undersupply in 2025, as the slower adoption of electric vehicles contributes to ongoing demand for autocatalysts.
In conclusion, despite the deficit, the platinum market remains in an undersupplied state, with potential opportunities for investment in the coming years. It is important for investors to stay informed about market trends and projections to make informed decisions about their financial portfolios.
Analysis: The platinum market has experienced a deficit in supply, leading to declining prices. However, there are opportunities for investment due to projected undersupply in the market. Investors should consider these factors when making decisions about their financial portfolios.