2018 Q1 Platinum Market Review released!
According to the World Platinum Investment Council (WPIC), Platinum Quarterly report for Q1 2018, global demand was 1,975 koz in the first quarter of the year, down marginally (-10 koz) year-on-year as gains in jewellery, (+30 koz) and industrial (+15 koz) demand were outweighed by declines in automotive (-35 koz) and investment demand (-20 koz).
Total supply rose 4% (+75 koz) year-on-year to 1,850 koz as both primary and secondary supply increased. The first quarter typically sees weak output from South Africa, but an improvement in output from Russia resulted in global refined production falling 10 koz and, unlike Q1’17, there was not a significant build in producer inventory, so overall total mining supply increased by 3% to 1,400 koz. The resulting market balance was a deficit of 125 koz.
Refined production fell by 0.7% (-10 koz) year-on-year to 1,405 koz in the first quarter of 2018. A fire at a South African producer’s furnace in February this year resulted in a build-up of concentrate (around 75-80 koz), reducing refined production in the quarter, but this was partly offset by ongoing operational improvements across the mines on South Africa’s Western-limb – including the extraction of higher-grade ore, higher concentrator recoveries and improved stopping efficiencies.
South African supply decreased by 3% year-on-year (-35 koz) to 985 koz overall. Supply from Russia increased by 18% year-on-year (+25 koz) to 165 koz in Q1’18 owing to the reconfiguration of downstream processing facilities that had negatively impacted on production volumes in the prior year period. Output from North America fell by 5% year-on-year (-5 koz) to 90 koz following the closure of a mine in Sudbury last year which had reached the end of its life.
Production from all other regions remained stable. There was a minor increase in producer inventory (2 koz), to give total mining supply of 1,400 koz for the quarter – up 3% (+45 koz) on Q1’17 when there was a larger (60 koz) rise in producer stocks. Secondary supply reached 450 koz in Q1’18, an increase of 7% year-on-year, but a decline of 13% from a very strong fourth quarter.
Autocatalyst recycling in the quarter saw a return to more typical levels, falling to 320 koz, following elevated catalyst collection volumes in the US and Europe in Q4’17, but grew 7% year-on-year from 300 koz. Jewellery recycling also rose compared to the same period last year, gaining 8% to 130 koz, as stronger retail performance in China led to more jewellery being traded in to purchase new items.
The first quarter of 2018 saw platinum demand slip 1% year-on-year (-10 koz) to 1,975 koz owing to lower automotive (-35 koz) and investment (-20 koz) demand which was not completely offset by gains in jewellery (+30 koz) and industrial (+15 koz) demand.
First-quarter global jewellery demand is estimated at 640 koz, a rise of 3% year-on-year, with all regions seeing demand at a similar or slightly higher level than in the first quarter of last year. All the major platinum jewellery markets (China, Japan, North America and Western Europe) have maintained high levels of consumer confidence over the first three months of 2018, despite some wobbles in the stock markets.
Retail sales growth for all jewellery continued in a strong manner in Asia, as mainland China saw a 7.9% increase in Q1’18 compared to the same period in 2017, while sales in Hong Kong and Macau were up by 3.8% year-on-year in January and then accelerated in February (up 31% year-on-year).
Although platinum has not benefitted as much from this tailwind as gold. Platinum trade on the Shanghai Gold Exchange has risen by 2% year-on-year in Q1’18, returning to growth after a 39% decline in Q1’17. The Indian
jewellery market has mostly readjusted following the introduction of the Goods and Services Tax last year as jewellers are no longer reporting significant problems or difficulties, and the slight increase in tax does not appear to have had a significant negative impact.
Global platinum supply is forecast to dip 1% (-105 koz) year-on-year to 7,975 koz this year as total mining supply falls 3% (-160 koz) to 6,015 koz, while recycling expands by 3% (+55 koz) to 1,960 koz. Most regions are expected to have lower refined production in 2018 with declines in South Africa (-30 koz), Zimbabwe (-25 koz), Russia (-65 koz) and Other regions (-5 koz) outweighing a projected gain of 10 koz in North America. Autocatalyst recycling continues to trend higher, although growth is expected to slow to 5% from 9% in 2017, reaching 1,405 koz, and this outweighs a 2% dip in jewellery recycling (-10 koz) to 550 koz.
Global platinum demand is projected to be marginally higher in 2018 than last year at 7,795 koz, as gains in industrial (+95 koz) and jewellery (+50 koz) demand offset declines in automotive (-105 koz) and investment (-10 koz) demand. Industrial demand is anticipated to recover by 6% year-on-year to 1,750 koz, as refinery closures which held back net petroleum demand in 2017 are not repeated and chemical, glass and other end-uses also see gains.
Jewellery demand is forecast to increase 2% to 2,510 koz this year as continued growth is expected in North America, Europe and India, and Chinese demand is projected to stabilise. Automotive demand continues to slip, falling 3% to 3,285 koz, as growth in commercial vehicles is insufficient to offset lower demand from passenger cars. Even with a slight dip in supply this year, the marginal growth in demand means that the market is projected to have a surplus of 180 koz in 2018.