During 2023, platinum has benefited from stellar industrial demand reaching a record level, with 2024 heading for the third-highest industrial demand spot.

The recent publication of the platinum quarterly of the World Platinum Investment Council (WPIC) also states that there has, in addition, been a strong 14% recovery in automotive production and, of most significance, ongoing growth in platinum-for-palladium substitution.

The platinum deficit trend continues, with a shortfall of 353 000 oz forecast for 2024, and this year’s deficit going beyond the one-million-ounce mark.

Both mining and recycling supply are expected to be well below pre-Covid levels in 2023 and 2024, and investment demand is forecast to remain positive next year.

WPIC research director Edward Sterck outlined to Engineering News & Mining Weekly aspects around exceptionally strong year-on-year demand growth of 26% as well as far-reaching aspects of the industrial demand growth, along with the forces that are at play when it comes to investment in platinum.

Regarding the sectors that helped industrial demand for platinum to soar sky-high, Sterck had this to say: “Probably the number one sector to highlight would be the glass sector. Platinum is in a platinum/rhodium alloy that is used in glass bushings for the production of fibreglass. It’s also used in the casting vessels for fibreglass and for high-quality liquid-crystal display (LCD) screens.

“Now, that’s really been one of the big drivers of the increase in demand for 2023. We do see things easing up a bit for 2024, but that’ll still be the third-highest year for industrial demand on record.

“Just specifically for the glass sector, it’s worth noting that we’re expecting a doubling of installed wind turbine capacity between now and 2030, which is quite a significant increase, and the blades for those wind turbines will largely be made of fibreglass that requires the platinum-containing facilities for the manufacturing of the fibreglass that goes into those.

“Other sectors that are worth noting include the medical sector, which is continuing to grow at a fairly steady pace. “Additionally, within the industrial categories, we have electrolysers and stationary fuel cells. This is related to green hydrogen, and whilst it’s starting off from a small base, it is growing pretty quickly – with proton exchange membrane electrolysers, which contain platinum catalysts for the production of green hydrogen, and then also stationary fuel cells, which contain platinum catalysts for taking the green hydrogen as an energy carrier and using it to generate electricity,” Sterck explained.

Industrial demand for 2023 is predicted to surge by 14% year-on-year (317 000 oz) reaching 2 652 000 oz, the strongest year on record.

Glass demand lifted by more than 50%, or 251 000 oz, and the chemical sector by 10%, or 68 000 oz-plus. While industrial demand is forecast to fall 11% in 2024, it will nevertheless be the third-highest level on record at 2 367 000 oz.

Engineering News & Mining Weekly: Mined supply is expected to remain low in 2023, and will increase by just 3% next year in 2024. What are the factors behind this, and how long is supply likely to remain constrained?

Sterck: In 2023, mine supply has been held back to a degree by planned maintenance, mainly in downstream processing infrastructure in South Africa, as well as, more at the beginning of the year, the impacts of the ongoing challenges that Eskom’s facing, and the shortage of electricity supply. Those problems seem to have eased a bit, and certainly the miners have done a good job of managing the challenges that the electricity shortages have presented. But looking into next year, it’s predominantly a result of just further planned infrastructure. Nornickel, the Russian nickel and palladium mining and smelting company, has a large smelter rebuild that was originally planned to be conducted in the fourth quarter of this year. That’s been deferred to next year. The impact of that is still pretty difficult to assess fully. But then there’s also some further planned maintenance scheduled for some of the producers in South Africa as well. With regard to how long the restrictions on mining supply remain in place, that’s pretty difficult to call. A lot of it depends upon what happens with Eskom. Does Eskom manage to solve its problems or does the situation deteriorate? If the Eskom situation deteriorates, then we’ll expect the headwinds facing money supply to continue for longer, and also all the other planned maintenance as scheduled over the medium term. We would expect mine supply to gradually normalise through time, but if Eskom’s challenges remain, then the headwinds would remain in place as well. The final thing on supply, over the medium term, is the impact of the fall in the palladium price and the rhodium price on the basket price and the profitability of the operations. Some of the producers have said that there are some shafts that are looking unprofitable at the moment and therefore there are some risks of either suspensions to operations, or potentially optimisation efforts that may result in lower output in the future.

Platinum recycling supply has also decreased this year, with low levels expected into 2024. Why is this?

That’s an interesting question. If you recall, in November last year, there was a scandal that emerged in the US where an aggregator of spent autocatalysts was raided by the FBI. A number of people were arrested, and they were accused of dealing with over half a billion dollars of stolen catalytic converters. In North America, it seems that trying to prove the provenance of spent autocats is something that’s acting as a bit of a challenge for the recyclers there and holding back supply. Recycling volume is down 50% to 60% year-on-year, depending upon which recycler one’s looking at. In a broader sense, however, the bigger issue seems to be that there’s just generally a shortage of end-of-life vehicles. As a result of lifestyle changes post-Covid, people are working from home more, they’re driving less, they run their vehicles for longer. Added to that, we’re going through a tricky economic period. There are some economic challenges. The disposable income levels have been compressed. As a result, we’re also seeing economic pressures on consumers that are resulting in them deferring new vehicle purchases and running existing vehicles for longer. Interestingly, in contrast to that, we are still seeing increasing output of new vehicles. It seems there is still a bit of a bounce-back from the underproduction through Covid and the semiconductor shortage of the last couple of years. But still, the vehicles that would normally have been scrapped are not being scrapped. Maybe they’re being shipped to more developing countries where, again, there’s been a bit of a shortage of new vehicles. It’s hard to say but at the moment all we can say is that recycling volume is down quite significantly, and it looks like it is going to be depressed for next year as well.

Automotive demand for platinum will jump by 14% this year and continue to increase in 2024, although more modestly. What is driving this increase at a time when challenges within the automotive sector have meant fewer vehicles in production overall?

Part of it is that there is a bit of a bounce-back in overall vehicle production from those Covid and semiconductor challenges. But looking into next year, we are expecting fewer internal combustion engine (ICE) vehicles being produced next year than this year. The increase in automotive demand is linked to a couple of different factors. Firstly, there’s still increasing platinum-for-palladium substitution in the exhaust treatment systems in gasoline vehicles, so that’s just purely on the price differential, which is closing a bit, so that may begin to slow down in the future. Additionally, this year in particular, there are tighter emission standards. That’s very much a China story this year. China has tightened the emission standards for the heavy-duty vehicles and brought in emissions control standards for the off-road vehicle category, which results in quite a big increase in platinum group metal (PGM) loadings. Then, finally, there’s a change in the drive-train mix. We’re seeing more hybrid vehicles being produced than in the past, either a plug-in hybrid or mild hybrid where some of the braking energy is harvested and returned to the motor when accelerating. Those vehicles are running more of the time with the engine turned off than a conventional ICE vehicle. When the engine is turned off frequently, the vehicle operates lower engine temperature and to meet the limits to emissions, higher PGM loadings are needed to ensure that those vehicles remain compliant. That’s typically a 10% to 15% increase over a normal ICE vehicle. So, it’s a number of different factors that are playing into those increases in automotive demand, and we expect some of those trends, particularly things like increasing hybridisation, to continue for the next few years.