Platinum demand predicted to surge this year, leaving a near 1-million-ounce deficit

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The price of platinum has soared as high demand meets low supply.

Tomohiro Ohsumi | Bloomberg | Getty Images

A previously anticipated platinum shortage will be worse than expected this year thanks to increased demand, particularly from the industrial sector, according to the World Platinum Investment Council. 

Global demand for platinum will see a 28% uptick this year compared to 2022, while supply will decrease 1% year-on-year, the organization said Monday.

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The platinum deficit for 2023 will be around 983,000 ounces (983 koz), the WPIC report said, which is a 77% upward revision compared to its last forecast in March

Industrial demand, particularly in chemical and glass production in China, is looking to be the strongest on record, the report estimates. Strong demand also continues in the auto sector as platinum becomes an increasingly common replacement for pricy palladium in catalytic converters, it said.

Platinum was priced at roughly $1,070 per troy ounce on Monday morning, having reached a multi-year high of around $1,130 in April.

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Price of platinum.

Investors took a real shine to the precious metal in the first quarter of 2023, with bar and coin investment jumping 71% compared to the same period last year. The 102,000-ounces’ worth of investment is the highest total since the third quarter of 2021, aided by renewed strength in Japanese demand, the WPIC reported.

The uncertain global economic environment, inflationary headwinds and the energy crisis provide a challenging macroeconomic backdrop for the platinum sector, the council’s CEO Trevor Raymond said in the report, but the likelihood for the precious metal to drop in value is low. 

“Importantly, the core drivers of platinum’s expected 28% demand growth in 2023 are areas where the downside risks are well protected,” Raymond said.

“These include the ongoing platinum for palladium substitution in automotive applications, and already committed glass and chemical capacity additions in China, both supported by increasing investment demand,” he added.

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