Platinum set for record supply deficit but unresponsive prices dent Zim’s export earnings
HARARE – The platinum market is experiencing an increasing supply shortage with total mine supply of platinum in 2024 is projected to be at its lowest level since 2013, a forecast decline of 2% year-on-year to 5,508 koz. This decrease is primarily driven by anticipated reductions in refined production across several key regions.
According to the World Platinum Council Investment report for the second quarter, South Africa, the largest producer of platinum is expected to see a decline in output due to restructuring efforts, shaft closures, and slower-than-expected production ramp-ups. The forecast for South African supply is approximately 3,883 koz, which reflects a 2% decrease from the previous year.
While Zimbabwe’s production is expected to remain stable at around 504 koz (a decrease of 1% over last year), it is not enough to counterbalance the declines from other major producers. The Zimbabwean platinum mining sector faces challenges similar to those in other regions, including cost pressures and the need for ongoing investment to maintain production levels.
For Q2, Zimbabwe platinum output remained unchanged year on year at 125 koz, as a fall at Zimplats was offset by increased at Unki, while production declined by 4% to 504 this year compared to 507 the same period last year.
Russian platinum production is also expected to decline, with forecasts indicating a drop to 646 koz due to planned maintenance and lower platinum content in ore sources
North American production is projected to remain flat or slightly decrease, reflecting ongoing operational challenges in the region.
Changes in supply, 2023 vs. 2024f
Despite the expected deficit and the shift in sentiment towards higher-for-longer automotive demand, platinum prices have so far remained unresponsive.
Platinum have dropped about 30% from a peak in early 2021, while sister metals palladium and rhodium have posted much steeper drops amid uncertainty over demand from the auto industry, which uses the metals to curb emissions from diesel and gasoline vehicles.
In the first half of this year, Platinum prices declined by 6.7%, while palladium and rhodium prices slumped by 35.3% and 49.1%, respectively. This divergent price trend within the PGMs portfolio has presented challenges for Zimbabwe’s mineral export earnings. According to Zimstat data, platinum (unwrought) exports declined 25% in the seven months to July to just below US$60 million. For the full year in 2021, unwrought platinum exports were at US$204.89 million.
Meanwhile, total platinum demand is forecast to rise to 8.12 million ounces in 2024, also helped by a 7% gain from the jewelry sector. Overall, industrial and automotive demand, which make up the bulk of the market, are both expected to nudge higher.-finx
