Gasoline three-way catalyst.
Photo by: Johnson Matthey
Automotive demand for platinum is expected to grow by 25% year-on-year to reach almost three-million ounces this year, the World Platinum Investment Council (WPIC) reports.
The three-million-ounce demand forecast will be 5% higher than prepandemic levels.
In fact, the WPIC says this year could see the highest automotive platinum demand since 2018, notwithstanding the expectation that light-duty vehicle production will be about 1.1-million units below prepandemic levels and heavy-duty production is likely to decrease by 1%, compared with 2020.
Key to the forecast strong demand recovery is the impact of tightening emissions legislation, especially in Europe and China, which the WPIC says “is driving higher platinum loadings across both light- and heavy-duty vehicles”.
The main automotive use for platinum is in emissions control systems, which reduce harmful emissions from internal combustion engine vehicles (predominantly diesel).
The term ‘loadings’ refers to the quantity of metal used in an emissions control system, where each system on a vehicle comprises one or more autocatalyst ‘bricks’, sometimes in combination with exhaust-gas recirculation and liquid urea injection. All parts of the system are intimately integrated with sensors and electronic engine firing controls.
As systems have become increasingly sophisticated in response to more stringent emissions limits and the advent of on-road, rather than in-laboratory, testing, metal loadings have increased.
For example, in Europe, following the 2015 Dieselgate scandal, the increased focus on reducing oxides of nitrogen (NOx) from diesel vehicles resulted in higher urea dosing rates and more platinum per catalyst to convert nitrogen oxide into nitrogen dioxide, optimising the removal of NOx.
Underpinning the 2021 forecast for increased automotive platinum demand is the implementation of China VI standards, applicable to heavy-duty vehicles, says the WPIC, noting that British multinational speciality chemicals and sustainable technologies company Johnson Matthey expects platinum group metal (PGM) loadings on trucks that meet China VI requirements to be about three times higher than loadings for China V, with platinum accounting for most of this increase.
The China VI requirements are due to come into force in July.
Meanwhile, rising PGM loadings heavily influence a further dynamic that is boosting automotive platinum demand growth — platinum substitution for palladium.
The WPIC explains that platinum is increasingly being used as a substitute for the relatively more expensive palladium in petrol emissions control systems, owing to the price differential between the two metals, bearing in mind that one gram of platinum provides almost the same catalytic effect as one gram of palladium.
Ever more stringent regulation is also playing a major part and, since January, all light-duty petrol vehicles sold in Europe and China have been required to meet new, lower emissions limits.
Further, the WPIC notes that vehicles in Europe are now subject to mandatory on-road testing as a result of the implementation of Euro 6d.
In China, under the current China 6a rules, on-road testing is not mandatory, but some manufacturers have already implemented emissions control standards that meet forthcoming China 6b rules on a voluntary basis, including on-road testing, which will be obligatory under China 6b.
“The combined impact of Euro 6d and China 6 regulations has led to significantly higher palladium loadings on the [petrol] vehicles produced in these regions. These higher loading requirements are exacerbating shortages in the palladium market, which in 2020 experienced its ninth consecutive deficit.”
This, the WPIC adds, in turn led to the price of palladium significantly overshooting the price of platinum and increasing the financial incentive to substitute, with the peak platinum-to-palladium discount of $1 060/oz in 2019 ballooning to $1 903/oz in 2020.
“As a result, platinum-for-palladium substitution has been accelerated further, although substitution on existing vehicle models can be a slow, less economically attractive process,” the WPIC comments.
Some industry participants now project that, by 2025, as much as 1.5-million ounces of additional platinum will be used yearly to replace palladium in car and van models whose first release predates the requirement to meet new emissions legislation, most likely in the North American market.