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Africa|Automotive|Industrial|Lifting|Mining|Platinum|Refining|Sustainable|Trucks|Equipment|Operations
Africa|Automotive|Industrial|Lifting|Mining|Platinum|Refining|Sustainable|Trucks|Equipment|Operations
africa|automotive|industrial|lifting|mining|platinum|refining|sustainable|trucks|equipment|operations

PGMs supply, demand to recover to pre-pandemic levels in 2021, says Johnson Matthey

10th February 2021

By: Donna Slater

Features Deputy Editor and Chief Photographer

     

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The platinum market remained in a deficit in 2020 despite an 18% fall in gross demand, estimates published in sustainable technologies company Johnson Matthey’s latest 'Platinum Group Metals Market' report show.

Primary platinum supplies plunged by 20%, owing to processing outages and Covid-19-related mine disruption in South Africa where a large portion of raw material originates.

Meanwhile, autocatalyst consumption contracted by 20% as a result of weak diesel vehicle production in Europe; however, industrial demand was more resilient resulting in investment thereto remaining strong.

In addition, the report finds that the phasing in of China 6 and Euro 6d emissions legislation boosted loadings of palladium and rhodium in gasoline autocatalysts. However, this increase in consumption was partly offset by sharply lower gasoline vehicle output.

As such, with mine supply down, both markets remained in significant deficit in 2020, lifting prices to record levels.

Meanwhile, rhodium experienced “extraordinary” price movements over the past two years, from below $3 000 in January 2019, to a new all-time high of over $21 000 in January 2021, the report finds.

This reflects low market liquidity, a fundamental supply deficit and relatively inelastic demand.

According to Johnson Matthey, only the glass sector is able to flex its rhodium use in the short term, by varying the rhodium content of platinum/rhodium alloys used in glassmaking equipment.

In 2020, very high prices led to a steep fall in rhodium demand from the glass sector, to levels not seen since the early 1990s.

Johnson Matthey principal analyst Alison Cowley says rhodium has unique catalytic properties, which makes it hard to replace in key applications in the autocatalyst and chemical sectors.

“Meanwhile, global supply is highly concentrated in South Africa, where the upper group two reef has unusually high rhodium grades compared with other sources of platinum group metals (PGMs).”

She adds that rhodium supplies were seriously affected by disruption at South African mining and processing operations in 2020, exacerbating shortages of this rare and critical metal.

PGMs supply and demand should recover towards pre-pandemic levels at some point this year as Covid-19 disruption eases, Johnson Matthey forecasts.

South African supplies will be augmented by the refining of a backlog that accumulated during processing plant outages in 2020.

Autocatalyst recycling is also set to rebound, although platinum volumes will be constrained by limited capacity for treating diesel particulate filter scrap.

Automotive PGMs demand is forecast to show double-digit growth, reflecting a recovery in light vehicle production and the implementation of China 6 legislation enforcing the use of PGM catalysts on heavy Chinese trucks.

Industrial demand is forecast to remain robust.

Further, the report says that high palladium and rhodium prices are stimulating thrifting and substitution programmes at many automakers, and as such, some automakers have already adopted platinum containing catalysts on gasoline cars, mainly in the cooler “underfloor” position where PGM loadings are comparatively light.

This year, Johnson Matthey expects some additional use of platinum-containing formulations in the hotter “close coupled” location, close to the engine, where PGM loadings are higher.

However, the overall impact on PGMs demand will remain limited, the company states.

As such, with supply and demand moving in tandem, PGM market fundamentals should be little changed this year, according to Johnson Matthey.

The palladium and rhodium markets are expected to remain in deficit, while the platinum market balance will depend on the behaviour of jewellery consumers and, above all, investors.

If platinum investment falls significantly below 2019 and 2020 levels, the market could move back into balance, or even into surplus, says Johnson Matthey.

Edited by Chanel de Bruyn
Creamer Media Senior Deputy Editor Online

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