Load-shedding causes platinum shortage

The World Platinum Investment Council raised its 2023 forecast deficit for platinum to a record high as investors bet on the metal’s supply declining.

Platinum consumption will outstrip supply by 983,000 ounces in 2023, WPIC wrote in its quarterly report on Monday.

That would be the biggest shortfall in records going back to the 1970s and compares with a deficit of 556,000 ounces the council projected in March.

The main driver of the deeper deficit is a fall in recycled supply as scrap yards withhold recovered metal from the market, WPIC said.

Output from South Africa — by far the world’s top producer — is also expected to fall due to the unprecedented power outages triggered by the crisis at utility Eskom.

Challenges to the metal’s supply is starting to draw interest from South African investment funds, who piled into exchange-traded funds backed by platinum in the first quarter.

That’s helped spot prices rally more than 20% since reaching a low in February.

“The trend over the last few years in South Africa has been to buy the equities over the metal,” said Ed Sterck, director of research at WPIC, referring to listed platinum miners.

“Now with the challenges facing the companies in terms of inflation and Eskom the funds there are preferring the metal itself.”

WPIC sees ETFs being net buyers of the metal this year for the first time since 2020.

Meanwhile, industrial demand will rise 17% year-on-year to an all-time high, it said, driven by large glass and chemical-making capacity expansions in China.