The World Platinum Investment Council (WPIC) today published its Platinum Quarterly for the first quarter of 2021, with a revised forecast for 2021.

For the fourth consecutive quarter, platinum posted a small deficit in Q1 2021 (-19 koz), as strong industrial, automotive and jewellery demand and sustained investment demand for platinum outstripped recovering but constrained supply.

As the global economy continued to recover, boosted by widespread stimulus measures, Q1’21 saw demand for platinum increase by 26% (+405 koz) year-on-year to 1,969 koz.

Meanwhile, following the effects of operational shutdowns and COVID restrictions in 2020, greater output from South Africa, an increase from Russia and growth in recycling saw total supply growing 11% (+187 koz) to 1,950 koz in Q1’21. While total supply is forecast to rise 16% to 7,883 koz in 2021, this is still some way off levels seen pre-pandemic (8,219 koz in 2019).

With demand for platinum expected to increase by 5% (+378 koz) to 8,041 koz, 2021 is set to generate a deficit for the third year running of -158 koz.

Industrial demand increases 44%, bolstered by glass

Overall industrial demand in Q1’21 was 44% (+201 koz) higher than in Q1’20 underpinned by a six-fold increase in demand year-on-year from the glass sector to 279 koz. Glass demand is forecast to increase 70% in the next year, as demand growth for use in screens and building materials is met by capacity expansions, mainly in China.

The improvement in economic activity will see demand for platinum in industrial applications increase by 25% (+486 koz), with notable rises in demand from the chemical (+11%, +62 koz), and petroleum (+65%, +71 koz) sectors. The ‘other’ industrial segment surged by 23% (+27 koz) in Q1’21, and is expected to grow 17% (+85 koz) in 2021 and includes growth in automotive (for use in spark plugs and sensors) and the green hydrogen agenda (increased stationary fuel cell deployment and early production of green hydrogen from renewable electricity).

Automotive demand forecast to exceed 2019 levels, despite supply chain curtailment

Testament to the strength of the recovery, higher vehicle production and tighter emissions regulations increased platinum automotive demand by 8% (+50 koz) in Q1’21 despite production being undermined by semiconductor shortages and a tightening of lockdown measures in some regions.

North America, in particular, saw platinum demand increase 12% (+10 koz), helping to offset declines in other parts of the world. In China, burgeoning vehicle ownership aspirations and the continued implementation of more stringent emissions legislation took Q1’21 platinum demand to 85 koz ? almost double that of the year before.

For 2021, despite supply chain challenges, global light-duty vehicle production is expected to be 16% higher than in 2020, while heavy-duty output is forecast to improve by 3%. This will result in an increase in automotive platinum demand of 22% (+557 koz) to 2,925 koz ? exceeding pre-pandemic levels.

Recovery in platinum jewellery sector

Jewellery demand recovered by 22% (+85 koz) year-on-year in Q1’21, with notable fabrication demand increases in China (+55%, +70 koz), India (+35%, +6 koz), and North America (+14%, +11 koz).

In 2021, platinum jewellery is expected to recover, growing 9% (+158 koz) above the prior year to 1,978 koz, and close to 2019’s levels (2,099 koz), with improvements particularly in the North American, European, and Indian markets.

Investment demand remains strong

During Q1’21, overall investment demand increased 96% (+69 koz) year-on-year to 140 koz. ETF holdings grew for the fourth consecutive quarter in Q1’21, as anticipated substitution gains in autocatalysts and platinum’s use in hydrogen technologies continued to attract investor interest.

This helped to offset a fall in bar and coin demand (-288 koz), which was almost entirely due to some Japanese investors capitalising on platinum price strength and selling back to the market. This was a typical reaction in Japan as platinum went above the historically key 4,000 Yen per gram level in this, the most mature market for platinum bars and coins.

While platinum investment is expected to remain strong in 2021 at 726 koz  at around the average for the last five years (725 koz)  it may not exceed the exceptional level seen in 2020. ETF holdings are expected to rise by 250 koz in 2021 as enthusiasm for platinum’s demand fundamentals will continue to prompt fresh investment inflows. Meanwhile, forecast bar and coin demand remains strong at 436 koz  albeit down from last year’s historically high 586 koz.