Heavy China platinum imports spur shortages elsewhere, WPIC says


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LONDON — Stronger than expected shipments

of platinum to China in the first half of the year spurred

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shortages elsewhere as supply declined from mines and recycling,

the World Platinum Investment Council (WPIC) said on Monday.

It was difficult to track what happened to some of the

Chinese imports, so the platinum market was in surplus on paper

but on the ground tightness sent lease rates surging to the

highest levels in a decade, the WPIC said in its latest

quarterly report.

“It certainly is weird to have a really big surplus

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published yet unavailability of metal in the spot market,” said

Trevor Raymond, the WPIC’s head of research.

Lease rates for platinum peaked at around 10% in May, higher

than at the peak of the pandemic. The one-month lease rate has

eased back to 3.6%, still much higher than the 10-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 of that could not be

tracked in terms how it was used, partly due to restrictions on

travel in the country, Raymond said.

“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 appear in our supply-demand

data.”

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Some buying may be due to low prices of platinum,

which have shed 13% this year and last week hit the lowest in

over two years, Raymond added.

China may be increasing its platinum loadings in catalytic

converters of heavy vehicles due to stricter emission standards,

he said.

Around 40% of platinum is used in vehicle exhausts to remove

harmful emissions. It is also widely used in jewelry.

Total supply is forecast to decline 8% this year, with mine

supply having declined 4% in the second quarter. Higher Russian

output was offset by declines elsewhere, the report said.

Investment demand was hit by fears of a global recession and

rising interest rates, causing holdings in exchange traded funds

(ETFs) to fall by 89,000 ounces in the quarter, the report said.

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The published data resulted in a platinum surplus of 349,000

ounces in the second quarter and an expected full-year surplus

of 974,000 ounces.

Following are supply and demand numbers and comparisons.

ANNUAL PLATINUM SUPPLY/DEMAND (‘000 oz)*

2021 2022f 2022f/2021

% change

SUPPLY

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%

DEMAND

Automotive 2,638 3,015 14%

Jewellery 1,953 1,959 0%

Industrial 2,507 2,132 -15%

– of which chemical 651 632 -3%

– Petroleum 172 184 7%

– Electrical 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 Holdings -238 -550 N/A

– Exchange Stocks -139 -300 N/A

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TOTAL DEMAND 7,053 6,540 -7%

MARKET BALANCE 1,087 974 -10%

Above Ground Stocks 3,638 4,612 27%

QUARTERLY PLATINUM SUPPLY/DEMAND (‘000 oz)*

Q2 2021 Q1 2022 Q2 2022 Q2/Q2 %

change

SUPPLY

Refined Production 1,566 1,269 1,546 -1%

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

Recycling 523 445 437 -16%

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

DEMAND

Automotive 657 744 708 8%

Jewellery 470 469 496 5%

Industrial 546 510 551 1%

– of which chemical 195 114 158 -19%

– Petroleum 39 42 46 17%

– Electrical 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 Holdings 31 -169 -89 N/A

– Exchange Stocks 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

(Reporting by Eric Onstad; Editing by Josie Kao)

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