The World Platinum Investment Council (WPIC), in its review of platinum supply and demand for 2018 and 2019, foresees a surplus of 680 koz in 2019, as compared to its former estimate of a surplus of 455 koz. This change is seen to be an outcome of a “temporary higher refined production in South Africa and supply growth elsewhere more than offsetting increased demand in 2019”, noted Paul Wilson, CEO of WPIC in his Foreword to the Platinum Quarterly Q4 2018.

“Total demand in 2019 is forecast to rise 5% compared to 2018,” Wilson said outlining the demand prospects. “Retail investment in bars and coins should continue to be solid in 2019 and the significant increase in ETF holdings already in 2019 supports the investment demand forecast of 530 koz. Automotive, jewellery and industrial demand for 2019 are forecast to decline slightly compared to 2018.”

Turning to the supply front, Wilson commented: “Supply is forecast to increase by 6% over 2018, mainly due to a one-off release of work in progress material in 2019 from several major producers in South Africa following refinery plant installation and maintenance in 2018. Without the one-off events in South Africa, we estimate that supply growth would have been closer to 2%, mainly driven by a project ramp-up in North America.”

Surplus for 2018 was calculated at 645 koz, compared to a prior estimate of 525 koz. “This was due to continued decline in jewellery (Q4 18 down 12% year on year) and investment (a net reduction of 65 koz in Q4 18),” Wilson said. “Q4, however, also revealed some positive data points in steadying automotive (up 10% in Q4 18 from the prior quarter, Q3 18) and further industrial demand growth (up 7% in Q4 18 vs Q4 17 and up 11% for 2018 vs 2017).”

On another note, recycling was up 1% to 1,910 koz in 2018 and forecast to grow 3% in 2019. However, jewellery recycling fell by 75 koz (-13%) to 485 koz in 2018.

“The platinum price was weak, particularly in the second half of the year, and this reduced the amount of jewellery returned by consumers,” WPIC said. “This was the primary cause of the decline in Japan, but in China the effect was compounded by another year of lower platinum jewellery sales which meant that less jewellery was returned to part fund new purchases.”

The WPIC expects jewellery demand to remain soft, with a decline of -1%, but with the decline in China at a slower rate than in 2018.

In summary, total platinum supply fell marginally to 8,010 koz in 2018 owing to lower mining supply, while recycled platinum increased modestly.

“Global platinum demand dropped by 5% last year to 7,365 koz, as declines in automotive, jewellery and investment demand outweighed improved industrial demand,” WPIC observed.  

For the jewellery sector, consumption was down 4% to 2,355 koz “as Chinese jewellery demand continued to fall and this outweighed gains in other regions”.  

WPIC said that in 2018, platinum demand contracted more than supply, resulting in a market surplus of 645 koz. 

In 2018, platinum jewellery demand decreased by 105 koz (-4%)   to 2,355 koz. “Chinese jewellery consumption continued its decline from 2013, dropping 165 koz (-12%) to 1,175 koz and reducing China’s share of demand from 54% in 2017 to 50% in 2018,” WPIC said. “All other regions grew or were flat and added a combined 60 koz.”

However, the news is not all subdued.  Platinum Guild International (PGI) USA reported that its campaign to encourage the use of platinum settings for gems on gold jewellery has been successful; while India is the other principal region of growth, adding 25 koz (+14%) in 2018 to reach 175 koz.  

 Looking ahead, WPIC expects the drop in jewellery demand to continue in 2019, but not at as rapid a pace as in 2018. It is expected to decline by 1% to 2,325 koz “owing to an easing of the decline in Chinese demand mostly being offset by growth in other regions”.  

In the US, demand growth is projected to be “reasonable” in 2019 but slightly slower than the rate seen in 2018.