The PGM market will remain rigid until the mid-decade due to increased demand and primary supply constraints – report

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(Kitco News) – According to Metals Focus, the Platinum Group Metals (PGM) market is expected to remain solid in the short to medium term as the recovery of vehicle manufacturing, stringent emissions legislation and growing primary supply constraints keep the markets Rigid PGMs, despite looming economic challenges.

Further on, the consultancy said the shift towards electrification and improving both primary and secondary supply will outweigh the growth in demand from the hydrogen economy.

“The single biggest driver of the PGM markets remains the demand for automatic catalysts. For this year, the demand for automatic catalysts will account for 82% of the total demand for palladium, eclipsed by 90% for rhodium. Platinum, having a more diverse range of end uses, you will only see 41% of its demand used in autocatalysis, with jewelry, chemicals, then glass making up most of the rest, “noted the report’s authors.

Metals Focus said that looking at the larger sector of PGM demand, in the short term, chip shortages remain the key issue, adding that the shortage is the single leading cause of the decline in automotive production this year, followed by other problems this year. supply chain and COVID blocks, particularly in China.

Together, the consultancy noted that these problems account for nearly 7.5 million fewer vehicles produced in 2022.

“As these problems ease further over the next two years, production of internal combustion engine (ICE) vehicles is expected to increase further. Having been a supply-constrained market for the past two years, the focus will have to shift to demand. fewer new cars as a potential limit, “he said.

While there is an element of pent-up demand, high fuel prices, higher financing costs (as interest rates rise), lower real disposable income and concerns about a looming recession will discourage the purchase of new cars, which it will weigh on the demand for PGMs and their respective prices.

Metals Focus noted that another, more existential, threat to the demand for PGM autocatalysts is electrification: the shift from the internal combustion engine (ICE) to electric vehicles (EV). Electric vehicles, which account for around one in twelve car sales this year, are set to grow significantly over the next few years.

“This growing market share consumes the monopoly of gasoline (and diesel), limiting its production and, in the long run, reducing the total amount of PGM required by the industry. For the time being, however, the production of ICE vehicles is expected to increase, “the consultancy said.

In addition to this, stricter global emissions legislation standards will also benefit the demand for PGM auto catalysts, notably Euro 7, China 6b and EPA 27 / CARB 24 for key markets, but also numerous improving standards in emerging markets. , for example PROCONVE L-8 in Brazil.

In addition to the demand for autocatalysts, recycling will also be a key factor in the balance of the PGM market. In addition to slightly higher overall volumes, the increasing availability of catalysts with higher PGM content returning to the refining pipeline is the main reason for the growth, Metals Focus added.

“This is particularly detrimental to the price of palladium as it has historically seen a substantial increase in loads and will therefore see the largest gains in recycling. To put palladium growth into perspective, we expect palladium autocatalyst scrap to contribute about a third of the total supply by 2027, compared to the quarter in 2022, “the consulting firm stressed.

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure the accuracy of the information provided; however, neither Kitco Metals Inc. nor the author can guarantee this accuracy. This article is for informational purposes only. It is not a solicitation to trade in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article disclaim any liability for loss and / or damage resulting from the use of this publication.


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