PGM sector to record surplus this year – report

Chemicals company Johnson Matthey says in its latest platinum group metals (PGM) market report that the sector is expected to record a surplus this year, despite a 27% gain in autocatalyst demand.
It said South African platinum supplies will rebound by nearly 40%, as Covid disruption subsides, and backlogs from processing outages in 2020 are treated. Higher prices are hitting investment, with Japanese bar purchasing turning negative in early 2021, and ETF buying subdued. 
“Chinese retailers stocked up on platinum jewellery in the second half of 2020, but the recovery has stalled due to a narrowing discount to gold,” said Johnson Matthey.
It also said that the palladium and rhodium markets will remain in deficit in 2021. 
Both metals recorded all-time high prices in early 2021, with palladium climbing above $3,000 and rhodium repeatedly rising to $30,000. 
“In response, automakers have accelerated thrifting and substitution programmes, seeking to reduce the use of these metals in gasoline autocatalysts. Despite this, both palladium and rhodium will see double-digit growth in automotive demand in 2021, as vehicle output rebounds, and major markets phase in tighter emissions regulations and more stringent test procedures,” said the chemicals company.
The report showed that the mine supply of PGM is forecast to recover strongly in 2021. It said shipments of PGM from South Africa will be augmented by the refining of a backlog of approximately one million ounces of PGM that accumulated during processing plant interruptions last year.
“Strong prices will incentivise increased recycling of PGM from scrapped vehicles, but platinum recoveries will be constrained by technical difficulties in the treatment of diesel particulate filter scrap,” said Johnson Matthey.

Mathew Nyaungwa, Editor in Chief of the African Bureau, Rough&Polished