Q1'23 saw a surge in investor interest, driven by heightened global uncertainty, platinum's strong demand growth and concerns about risks to mine supply. Bar and coin investment jumped by 71% year-on-year in Q1'23 to 102 koz, propelled by a marked recovery in Japan. This trend is set to continue for the full year, with an increase of 79% forecast. Meanwhile, net platinum ETF holdings grew by 43 koz in Q1'23, reversing the previous six quarters' net disinvestment. Again, this trend is expected to continue in 2023. The result will mean net investment demand of 433 koz in 2023 – a swing of 1,073 koz on 2022.
Industrial demand in 2023 will be the strongest on record
Industrial platinum demand grew 8% in Q1'23, driven by growth in chemical demand of 108% due to paraxylene capacity additions in China. On a full-year basis, LCD glass capacity additions in China are expected to offset closures in Japan and result in glass demand for platinum growing by 76% year-on-year to 730 koz. Overall, this year is forecast to be a record year for industrial demand, growing by 17% year-on-year to 2,628 koz.
Platinum automotive demand up strongly despite weak macro outlook
Automotive demand rose 9% to 806 koz in Q1'23, partly aided by higher vehicle production, but mainly on increased platinum use per vehicle. On a full year basis, global automotive demand is expected to rise by 12% in 2023 to 3,255 koz driven by a number of factors. Firstly, heavy-duty vehicle (HDV) production is forecast to grow by 6% in 2023, with output in China jumping by as much as 26%. Secondly, tighter emissions legislation, particularly in China, will result in higher loadings, especially for HDVs and non-road vehicles. Lastly, growing platinum for palladium substitution in gasoline after-treatment systems will further boost platinum consumption. Significantly, this has meant a further upward revision to the substitution estimate for 2023 to 615 koz.
Total supply continues to struggle in 2023
Refined mine production declined 8% in Q1'23 year-on-year and fell 11% against Q4'22, as gains from Russia failed to offset reduced output from South Africa. While mined platinum supply is forecast to fall by a modest 1% to 5,511 koz in 2023, as reductions in South Africa are partially offset by gains in Zimbabwe and North America, significant uncertainties still exist for South African platinum supply due to the impact of the country's ongoing electricity shortages.
Global recycling of platinum remained sluggish in the first quarter of 2023, falling 12% year-on-year to 413 koz, due to reduced volumes of end-of-life vehicles. Meanwhile, the regulatory environment in North America aimed at curbing autocatalyst theft also hindered recycling volumes. With both issues likely to prevail throughout 2023, full-year platinum recycling supply is forecast to fall by 1% to 1,682 koz.
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