Platinum Surplus will remain
Modest Despite Coronavirus Chaos

(Reuters) – Platinum demand will plummet by 18% this year and supply by 13% as the coronavirus batters the global economy, leaving the market with a moderate surplus, according to the World Platinum Investment Council (WPIC).

In its latest quarterly report, the WPIC revised its forecast for oversupply this year in the roughly 8-million ounce platinum market to 247,000 ounces from 119,000 ounces. All major consumers of platinum – automakers, jewellers, industry and investors – will want less metal this year, according to the WPIC.

But "the net effect (of the coronavirus) is less than feared, and the outlook for 2020 is better than expected," it said. It forecast demand in 2020 at 6.95 million ounces and supply at 7.2 million - the lowest for both since at least 2013.

The platinum market was upended in February and March as the coronavirus spread across the globe, shutting factories, shops and mines. Prices plunged as much as 45% to $558 an ounce before recovering to around $750.

Lower prices propelled a surge in buying, particularly by bargain-hunting investors in Japan and industrial consumers in China, the WPIC said.

Bars and coin purchases almost tripled year-on-year in the first quarter to 312,000 ounces, and the WPIC expects them to reach 605,000 ounces for the full year, more than double their level in 2019.

Exchange traded funds storing metal for larger investors, however, will not increase their holdings at all this year after adding more than a million ounces in 2019, the WPIC said.

Demand from the auto industry – which uses platinum to reduce vehicle emissions – will fall by 14% this year even as consumption in China rises 14% due to tighter emissions standards, according to the report.

Sales of diesel vehicles, which use more platinum, could also benefit if the coronavirus crisis slows efforts to transition to electric vehicles, said the WPIC's director of research, Trevor Raymond.

On the supply side, output in South Africa, the biggest producer, will fall 17% in 2020 to 3.65 million ounces, while the other top producers Zimbabwe, North America and Russia will see their output shrink between 1% and 5%.