JM and WPIC Latest Platinum Supply-Demand Reporting

A Brief Update on Their Respective Reports May 2021

The whole global metals and commodities complex has undoubtedly entered an extremely influential bullish super-cycle, with forecast price resolutions set to move considerably higher over the next few years based on a myriad of highly impactful macro developments, namely:

Global supply / demand deficits in the metals and commodity markets, higher prices are irreversible in such core developments.
Severe ore grade degradations (it is widely accepted that just 1% of global mine production of 'aggregate' is actually usable metal ore grades).
Rising costs of mine production as a result of substantial increases in energy prices.
Mine exploration moratorium driven by nearly 10-years of depressed commodity prices.
New global infrastructure build-out supported by gigantic deficit spending and the embrace of Modern Monetary Theory (MMT).
Global push into the ‘decarbonisation of energy production’ (green transformation of the global economy) which demands a massive yearly escalation in outright metal demand curves; particularly in the demand for Platinum Group Metals (PGM’s).
Pollution controls  -  ensuring a massive yearly escalation in metal demand curves (bullish PGM’s).
Global Monetary Debasement  - inflation pickup and policy leader's quest for very high inflation to debase the purchasing power of currencies and devalue the scale of the global debt crisis. The present cost-push inflation is most definitely not transitory and is expected to escalate in the years ahead.As a function of growing inflation we are seeing the collapse of real nominal rates (already in firm negative territory).

We are just at the beginning of this next decade-long trend of immense global infrastructure build-outs and these developments will push up metal prices by many multiples. Analysing the simple mathematics of supply / demand curves helps to lay bare this certainty. 

Please find the latest comments by Dr David Davies, our man on the ground in South Africa who we have engaged to conduct hard research for us within the PGM space.

Brief note from Dr David Davies :

Johnson Matthey (JM) Annual (May) Report and the World Platinum Investment Council (WPIC) Quarterly Report both released their PGM Market Reports on 17 May 2021. 

Both reports have a very positive outlook in regards to 2021 PGM forecasts which complement our latest PGM research themes. Do not be surprised by South Africa’s PGM production forecast in 2021. This is mainly due to South African supplies, which will be augmented by a refining backlog of PGM’s from 2020 processing outages and Covid-19 (Amplats ACP Plants)

Notwithstanding, JM expects a positive Platinum market balance in 2021 of c. 615koz (WPIC (World Platinum Investment Council) on the other hand, forecasts a Platinum market deficit of -158koz in 2021), due mainly to a sharp decline in investor demand. The JM forecast assumes that positive investor sentiment will continue to support ETF investment during 2021, albeit at lower levels than in the past two years.
Definition: (koz: Thousand Troy Ounces)

JM also indicated that Platinum's share of the auto PGM’s mix is inexorably rising and demand for Platinum in gasoline cars will climb steeply in 2021, albeit from a low base. JM indicated that Platinum will also benefit from the phase-in of China VI emissions legislation. ”Meeting China VI limits requires a complete overhaul of heavy-duty diesel catalyst systems and we expect PGM loadings on Chinese diesel trucks to more than treble this year”.

JM expects a negative market balance for Palladium -829koz and Rhodium -31koz in 2021.

JM’s report also included a special feature entitled ‘Green hydrogen for a net zero future: What role for PGMs?' JM reported seeing strong growth in demand for Platinum (and Iridium) in hydrogen fuel cells for stationary and transport applications. “In future, we expect to see wider use of PGM catalysts to produce green hydrogen using polymer electrolyte membrane electrolyser technology”.

WPIC (MF) on the other hand, forecasts a Platinum market deficit of -158koz in 2021, due mainly to a shortfall in supply. During Q1, Platinum posted a small deficit of -19koz, given strong industrial, automotive and jewellery demand as well as developing supply constraints.

Metals Focus and LPPM WEBINAR : Automotive Net Zero and Implications for PGM will be released shortly to open market.

It’s an incredibly exciting time for investors to be involved in this space, not only from a diversification out of incredibly speculative overvaluations in the general markets (stock indices and property etc..) but also as our new world changes rapidly in the face of enormous infrastructure builds and technology changes in the energy complex, the demand on metals in particular becomes simply overwhelming.


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