The World Platinum Investment Council (WPIC) predicts a marginal impact of platinum price in 2023 due to the nature and size of platinum stocks in China and the deficit forecast during the year 2023.
China's excessive imports have left limited stock (above ground) for the global users to meet supply/demand deficits. Studies suggest that high prices of platinum will be seen in China before inventories are available even for the domestic market.
China's Custom data indicates that the country has been importing platinum well in excess of identified demand since March 2020. However, there has also been a change in total volumes imported since early 2021, indicating an increase in real demand.
Meanwhile, Chinese end users in the automotive, jewellery and industrial sectors have been using more platinum or have been adding to buffer inventories in anticipation of a supply shortage.
Demand for platinum in China has shrunk by about 1 Moz since 2013, reflecting reduced demand from the jewellery industry, whilst demand from the automotive and industrial segments has grown consistently.
Therefore, the excess imports by China can be attributed to direct imports by industrial manufacturers, and platinum traded through the Shanghai Gold Exchange (SGE) by traders or fabricators who need to reclaim VAT.
The direct imports are quasi-speculative or buffer stocks, and this inventory build-up is not available to re-enter Western markets to address the deficit in 2023 due to domestic export controls.
Platinum’s attraction as an investment asset arises from a situation when supply remains challenged despite some new investment in mining capacity; automotive platinum demand growth should continue due principally to substitution in gasoline vehicles.
The platinum price remains historically undervalued and significantly below both gold and palladium; Significant excess imports into China is resulting in significant physical tightness and high lease rates; and WPIC research indicates platinum market entering sustained, growing deficits from 2023.
Aruna Gaitonde, Editor in Chief of the Asian Bureau, Rough&Polished
China's excessive imports have left limited stock (above ground) for the global users to meet supply/demand deficits. Studies suggest that high prices of platinum will be seen in China before inventories are available even for the domestic market.
China's Custom data indicates that the country has been importing platinum well in excess of identified demand since March 2020. However, there has also been a change in total volumes imported since early 2021, indicating an increase in real demand.
Meanwhile, Chinese end users in the automotive, jewellery and industrial sectors have been using more platinum or have been adding to buffer inventories in anticipation of a supply shortage.
Demand for platinum in China has shrunk by about 1 Moz since 2013, reflecting reduced demand from the jewellery industry, whilst demand from the automotive and industrial segments has grown consistently.
Therefore, the excess imports by China can be attributed to direct imports by industrial manufacturers, and platinum traded through the Shanghai Gold Exchange (SGE) by traders or fabricators who need to reclaim VAT.
The direct imports are quasi-speculative or buffer stocks, and this inventory build-up is not available to re-enter Western markets to address the deficit in 2023 due to domestic export controls.
Platinum’s attraction as an investment asset arises from a situation when supply remains challenged despite some new investment in mining capacity; automotive platinum demand growth should continue due principally to substitution in gasoline vehicles.
The platinum price remains historically undervalued and significantly below both gold and palladium; Significant excess imports into China is resulting in significant physical tightness and high lease rates; and WPIC research indicates platinum market entering sustained, growing deficits from 2023.
Aruna Gaitonde, Editor in Chief of the Asian Bureau, Rough&Polished
