China’s heavy platinum imports are causing shortages elsewhere, says WPIC


It has been difficult to track what has happened to some of the Chinese imports. The platinum market was therefore in surplus on paper, but on the ground, the tightness of the situation caused rental rates to jump to the highest levels in a decade, the WPIC said in its latest quarterly report.

“It’s certainly bizarre to have a really large published surplus and yet unavailability of the metal in the spot market,” said Trevor Raymond, WPIC’s head of research.

Platinum rental rates peaked around 10% in May, higher than at the height of the pandemic. The one-month rental rate fell to 3.6%, which is still well above the ten-year average of 0.3%, Raymond added.

China imported 1.44 million ounces of platinum in the first six months of the year, but 645,000 ounces could not be tracked for use, in part due to travel restrictions in the country. said Raymond.

“While speculative flows are certainly part of it… there also seems to be more consumption, but we can’t prove it and it’s frustrating that it doesn’t show up in our supply and demand data.”

Some buying may be due to weak platinum prices, which have fallen 13% this year and last week hit their lowest level in more than two years, Raymond added.

China may increase its platinum loadings in heavy-duty catalytic converters due to stricter emission standards, he added.

About 40% of platinum is used in vehicle exhausts to eliminate harmful emissions. It is also widely used in jewelry.

Total supply is expected to fall 8% this year, with mining supply down 4% in the second quarter. The rise in Russian production was offset by declines elsewhere, according to the report.

Investment demand was hit by fears of a global recession and rising interest rates, leading to an 89,000 ounce drop in exchange-traded funds (ETFs) during the quarter , according to the report.

The data released resulted in a platinum surplus of 349,000 ounces in the second quarter and a forecast surplus for the full year of 974,000 ounces.

Here are the numbers and comparisons of supply and demand.

ANNUAL PLATINUM SUPPLY AND DEMAND (‘000 oz)*

2021 2022f 2022f/2021

% change in supply

OFFER

Refined production 6,297 5,794 -8%.

Producer inventory +/- -93 0 N/A

Recycling 1,936 1,720 -11%.

TOTAL SUPPLY 8,140 7,514 -8%.

REQUEST

Automotive 2,638 3,015 14% -8

Jewelery 1.953 1.959 0%%.

Industry 2,507 2,132 -15% of which chemicals 651 632 -3%.

– of which chemical products 651 632 -3%

– Oil 172 184 7

– electricity 135 119 -12%

– Glass 744 359 -52

– Medical 256 265 4

– Other 551 572 4

Investment -45 -565 N/A

– Bars, coins 332,285 -14%.

– ETF securities -238 -550 N/A

– Stock market shares -139 -300 N/A

TOTAL DEMAND 7,053 6,540 -7%

MARKET BALANCE 1,087 974 -10%

Aboveground inventories 3,638 4,612 27%.

QUARTERLY PLATINUM SUPPLY AND DEMAND (thousands of ounces)*.

Q2 2021 Q1 2022 Q2 2022 Q2/ Q2 % CHANGE

variation

OFFER

Refined production 1,566 1,269 1,546 -1%.

Producer stock +/- +18 -26 -21 N/A

Recovery 523 445 437 -16%.

TOTAL SUPPLY 2,106 1,688 1,961 -7%.

REQUEST

Automotive 657 744 708 8

Jewelery 470 469 496 5

Industry 546 510 551 1

– of which chemicals 195 114 158 -19%

– Oil 39 42 46 17

– electricity 35 30 27 -23%.

– Glass 83 109 100 21

– Medical 62 68 68 8

– other 131 147 152 16%.

Investment 187 -165 -142 N/A

– Bars, coins 107 61 70 -34%.

– ETF securities 31 -169 -89 N/A

– Stock market shares 49 -58 -123 N/A

TOTAL DEMAND 1,860 1,558 1,612 -13%.

MARKET BALANCE 247 130 349 42%

*Source: World Platinum Investment Council, Platinum Quarterly Q2 2022



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