Pgm Market Report: 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.

• 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.

• 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 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.