Platinum: 1 MILLION Ounce Shortage in 2023

The World Investment Platinum Council has just reported that 2023 could have an astonishing 1 million ounce shortage of platinum. This would be "the largest deficit on record...". According to the report, demand is up 27% and the supply will simply not be able to keep up.

Why is platinum so sought after? 

• Roughly 85% of platinum is used in catalytic converters. 
• Most catalytic converters abilities are derived from the thin layer of 3-7 grams of platinum, which is inside. 
• The platinum has the incredible ability to oxidise poisonous carbon monoxide and hydrocarbons. 
• According to the report, "Platinum automotive demand rose 19% year-on-year (+136 koz) to 840 koz in Q2’23".

Increasing environmental regulations have put a strain on automakers. They can either completely redesign their vehicles or add a few grams of platinum to their exhausts and meet standards. Which option do you think looks more equitable for auto companies? Major companies, such as General Motors, have publicly announced pivots to electric vehicles, but have long timelines.  GM expects a move to all electric to not happen until 2030, and that's not guaranteed. Until then, they are caught in the crossfire of increasing environmental/climate regulations and a large fleet of over-sized gasoline and diesel vehicles.

Possibly more exciting is the huge demand for platinum in green energy production, particularly hydrogen fuel cell technology. We discussed this in May here.

Investors have also been on the hunt for platinum. The report reveals a significant increase in platinum ETF holdings this year. As far as bars and coins, it states that "2023 is likely to see a year-on-year jump of 45% (+102 koz), to 326 koz, the first growth in bar and coin investment in three years".

The only thing that could ease the pressure is potentially an increase in mining. The major problem is that South Africa is the world's largest miner of platinum group metals and has been unable to keep up with demand. South Africa has been plagued by power outages and limitations, maiming their existing mining operations. The current outages and blackouts may last for years. From WPIC:

“Refined mine production declined 4% (-65 koz) year-on-year in Q2’23, totalling 1,464 koz, as increases from North America and Russia were heavily outweighed by a decline from South Africa. For 2023, mined platinum supply is forecast to be flat on 2022 (5,565 koz), although South African platinum supply remains vulnerable to ongoing electricity shortages.

Global recycling of platinum declined 12% (-46 koz) year-on-year to 345 koz in Q2’23. Supply from spent autocatalysts was down 13% (-37 koz) year-on-year, with lower-than-expected end-of-life vehicle supply persisting. Full-year platinum recycling supply is forecast to fall by 4% to 1,620 koz.”

20 Years Ago, This Pattern Happened:

A look at this platinum chart also reveals something interesting. The only time this bullish candle pattern formed before this year was in 2002. The "weekly" candle chart is one of the highest timeframes, thus any patterns that play out can hold much more authority. The 2002 pattern was followed by an incredible run upward, so we may be seeing an alignment of this candle pattern to the 1 million ounce shortage forecasted this year.