Platinum supply up, but still below pre-Covid-19 levels
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THE WORLD Platinum Investment Council (WPIC) said total platinum supply for 2021 was now forecast to rise 17 percent year-on-year, but still remained below pre-pandemic 2019 levels.
In its second quarterly report for 2021, the WPIC, which provides insights to advance platinum demand, said total platinum supply would rise by 17 percent year-on-year to 7.943 million ounces following significant reductions experienced during 2020, with refined production rising by 21 percent to 6.047 million ounces and recycling supply by 2 percent to 1.936 million ounces.
The WPIC said since the recommissioning of the Anglo Platinum converter plant (ACP) Phase A unit in December last year, the plant had operated above expectations, enabling more semi-finished material that built up during the ACP outages in 2020 to be processed this year.
“This higher ACP operating rate, combined with South African miners’ ongoing success in avoiding further operational challenges from Covid-19 infections, is driving the increase in mine supply in 2021,” said WPIC.
The WPIC said the platinum supply in 2021 reflected an expected 21 percent recovery in refined production and a 2 percent increase in recycling supply.
According to the WPIC, supply in the second quarter of 2021 was 65 percent higher than in the second quarter of 2020 primarily due to South African mines being able to operate at 97 percent of planned capacity, as operating protocols prevented widespread Covid-related disruption, but with quarterly output boosted as the ACP ran at a higher rate than previously expected, processing more of the semi-finished material built up during the ACP outages in 2020.
The council said demand in the second quarter rose 23 percent year-on-year on a continued recovery in demand across key end-use sectors.
“Automotive demand, up 75 percent, industrial demand, up 46 percent, and jewellery demand, up 19 percent, benefited from the continued easing of Covid-related lockdown measures in most regions, enabled by the acceleration of mass vaccination programmes, combined with continued government stimulus packages,” said the council.
Platinum prices hit a six-year high in February on increasing investment demand and as investors betted on precious metals playing a role in the clean energy transition.
The WPIC said platinum prices were well supported through much of the second quarter, averaging $1 183 (R16 893) an ounce, up 49 percent year-on-year, and the highest quarterly average since the first quarter of 2015, benefiting from a notably strong recovery in automotive and industrial demand during the first half of the year.
However, since the end of the second quarter of 2021 the platinum price had weakened, trading below $975 an ounce on negative investor sentiment towards industrial metals, said the WPIC.
“This was driven by concerns of slower global growth during the second half of the year than previously anticipated, in part due to increased Covid delta variant infections globally, and expectations of a ‘sooner rather than later’ move by the US Federal Reserve to taper asset purchases,” said the WPIC.
The WPIC said, for platinum, this macro-driven negative sentiment had been exacerbated by platinum miners’ mid-year results, indicating a surge in platinum production during the second quarter, plus news flow regarding the global semiconductor chip shortage constraining the recovery in automotive production.