Long-term super bullish, especially when whichever President prints more monopoly money! Short-term - am I being too optimistic?
PLATINUM QUARTERLY / Q2 2020 / © World Platinum Investment Council Ltd 2020
8th September 2020
Platinum supply and demand – updating 2020
The revised 2020 forecast has moved the platinum market into an annual deficit of -336 koz compared to the prior estimate of
a +247 koz surplus. Total platinum supply in 2020 is now forecast to fall by 14% (-1,159 koz) to 7,102 koz. This reflects a 15%
(-910 koz) decline in refined production and a 12% (-250 koz) decline in recycling supply.
Total platinum demand in 2020 is forecast to be 7,438 koz, 11% (-948 koz) lower than in 2019 due to lower demand from all
four demand segments: automotive (-464 koz), jewelry (-287 koz), industrial (-5 koz) and investment (-192 koz). However, total
investment demand in 2020 is now forecast to be 1,060 koz, 15% lower than in 2019 but 455 koz higher than previously forecast for
the year. Indeed, heightened global risk is expected to continue to drive investor demand for hard assets, with bar and coin demand
forecast to grow by 113% to 600 koz.
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Platinum’s price outperformance of gold is no anomaly. Over the two years from the price lows of the Global Financial Crisis (GFC)
in late 2008, platinum’s weekly returns outperformed gold’s by between 30% and 65%. Platinum’s performance was not solely due to
growing investment demand; exceptionally strong platinum jewellery demand and limited supply growth maintained positive investor
sentiment despite very weak automotive demand. During 2020, platinum market fundamentals have improved appreciably, as noted
above, with strong buying in China on the SGE and direct platinum imports. Platinum’s longstanding strong correlation with gold has
rebounded to over 0.7 since the COVID-19 pandemic unfolded. Consequently, many more gold investors could consider platinum as
a proxy for gold on that correlation alone, with the added potential outperformance of platinum a further enticement.
PLATINUM QUARTERLY / Q2 2020 / © World Platinum Investment Council Ltd 2020
8th September 2020
Platinum supply and demand – updating 2020
The revised 2020 forecast has moved the platinum market into an annual deficit of -336 koz compared to the prior estimate of
a +247 koz surplus. Total platinum supply in 2020 is now forecast to fall by 14% (-1,159 koz) to 7,102 koz. This reflects a 15%
(-910 koz) decline in refined production and a 12% (-250 koz) decline in recycling supply.
Total platinum demand in 2020 is forecast to be 7,438 koz, 11% (-948 koz) lower than in 2019 due to lower demand from all
four demand segments: automotive (-464 koz), jewelry (-287 koz), industrial (-5 koz) and investment (-192 koz). However, total
investment demand in 2020 is now forecast to be 1,060 koz, 15% lower than in 2019 but 455 koz higher than previously forecast for
the year. Indeed, heightened global risk is expected to continue to drive investor demand for hard assets, with bar and coin demand
forecast to grow by 113% to 600 koz.
-----------
Platinum’s price outperformance of gold is no anomaly. Over the two years from the price lows of the Global Financial Crisis (GFC)
in late 2008, platinum’s weekly returns outperformed gold’s by between 30% and 65%. Platinum’s performance was not solely due to
growing investment demand; exceptionally strong platinum jewellery demand and limited supply growth maintained positive investor
sentiment despite very weak automotive demand. During 2020, platinum market fundamentals have improved appreciably, as noted
above, with strong buying in China on the SGE and direct platinum imports. Platinum’s longstanding strong correlation with gold has
rebounded to over 0.7 since the COVID-19 pandemic unfolded. Consequently, many more gold investors could consider platinum as
a proxy for gold on that correlation alone, with the added potential outperformance of platinum a further enticement.