China Speculation Puts Global Platinum Stocks into Oversupply

The global platinum market was hugely oversupplied in 2021, the World Platinum Investment Council (WPIC) said on Wednesday as it predicted another large surplus of the metal this year.

It said supply of platinum rose by 21% last year, while demand fell 9%.

But huge imports of platinum into China, much of it by speculators taking advantage of relatively low prices, consumed the market surplus in 2021, the WPIC said.

Higher loadings of platinum in heavy duty vehicles in China and substitution of palladium for platinum lifted demand from the auto sector despite lower vehicle output due to a chip shortage, the council said.

Platinum is used alongside palladium and rhodium to neutralise exhaust emissions in cars, as well as in industries such as glassmaking, for jewellery and as an investment.

“We’ve got the largest surplus we’ve ever recorded yet the market remains pretty tight,” Trevor Raymond, the WPIC’s head of research, said.

Raymond said a huge rise in palladium prices triggered by the conflict in Ukraine could make automakers switch more rapidly to cheaper platinum to save money, boosting demand.

Russia accounts for 25-30% of the world’s palladium supply and 7-10% of its platinum. Uncertainty over Russian exports has pushed palladium prices to record highs above $3,000 an ounce.

Platinum prices have risen less dramatically to around $1,170 an ounce.

The WPIC said the roughly 8 million ounce a year market was oversupplied by 1.23 million ounces in 2021 and predicted a surplus of 652,000 ounces in 2022.

The council said platinum supply should fall 1% in 2022 as a backlog of semi-processed material in South Africa runs out.

It said it expected demand, which dropped last year as a sharp fall in purchases by investors more than offset higher consumption by industry and jewellers, to rise by 7% in 2022.

Reuters, with additional editing by George Russell

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George Russell

George Russell is a freelance writer and editor based in Hong Kong who has lived in Asia since 1996. His work has been published in the Financial Times, The Wall Street Journal, Bloomberg, New York Post, Variety, Forbes and the South China Morning Post.