The platinum market has experienced a 661,000-ounce deficit in the first three quarters of the year, yet prices have declined by approximately 6%. According to UBS, this unexpected trend can be attributed to the fabrication balance, which measures supply against industrial and jewelry demand, excluding investment needs.
Throughout the year, the fabrication deficit totaled 307,000 ounces. This included 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 weakened in the third quarter, falling by 226,000 ounces, possibly influenced by deteriorating market fundamentals.
Meanwhile, mine supply increased by 7% year-over-year to 1.48 million ounces in the third quarter. This increase was largely due to a recovery in South African production, which grew by 9% year-over-year to 1.07 million ounces after previous power disruptions had impacted output.
On the demand side, industrial usage rose by 15% year-over-year to 570,000 ounces, with the glass sector showing a particularly weak demand environment in the third quarter of 2023. Conversely, the automotive sector saw a decrease in demand by 3% year-over-year to 750,000 ounces in the third quarter of 2024, affected by a sluggish European market.
This data was provided by the World Platinum Investment Council (WPIC). In a more positive light, jewelry demand increased by 7% year-over-year to 480,000 ounces, marking the fourth successive quarter of year-on-year growth.
Looking ahead, both UBS and the WPIC project a continued undersupply in the platinum market. The WPIC forecasts a 539,000-ounce deficit for the next year.
UBS anticipates the market will remain undersupplied in 2025, with a slower introduction of electric vehicles contributing to sustained demand for autocatalysts. Hybrid vehicles, which include both an internal combustion engine and a catalytic converter, are currently more popular among consumers than fully electric vehicles.
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This post is originally published on INVESTING.
