PGM market to remain tight into mid-decade due to high demand and initial supply constraints – Report

Editor’s Note: With so much market volatility out there, stay tuned for the daily news! Immerse yourself in minutes with our quick summary of today’s news and must-read expert opinions. Register here!

(Kitco News) — According to Metals Focus, the platinum group metals (PGM) market is expected to remain strong in the short to medium term with the recovery of vehicle production, stricter emissions regulations and increasing initial supply constraints keeping PGM markets tight, Although economic challenges loomed.

Moreover, the consultancy said the shift towards electrification and improvements in both primary and secondary supply will outpace growth in demand from the hydrogen economy.

“The largest single driver for the PGM markets remains the demand for the autocatalyst. For this year, demand for the autocatalyst will account for 82% of the total demand for palladium, outstripping 90% for rhodium. Platinum, which has a more diverse range of end uses, will only lead You see 41% of the demand for it is used for autocatalysts, with jewelry, chemicals and then glass making up the bulk of the rest,” noted the report’s authors.

Looking at the largest demand segment for PGM, in the short term, chip shortages remain the main issue, Metals Focus said, adding that shortages this year are the single biggest reason for the drop in auto production, followed by other supply chain issues and COVID shutdowns – most notably. In China.

Combined, the consultancy noted, these issues account for nearly 7.5 million cars produced overall in 2022.

“As these issues mitigate over the next two years, ICE production is expected to rise further. As it has been a supply-constrained market for the past two years, attention should turn to declining demand for new vehicles as a potential constraint.”

While there is an element of pent-up demand, higher fuel prices, higher financing costs (with higher interest rates), lower real disposable income and concerns about a looming recession will discourage purchases of new cars, all of which will affect PGM demand and pricing for each other. Of which.

Metals Focus has noted that another, more existential, threat to demand for PGM’s self-catalyst is electrification — the switch from an internal combustion engine (ICE) to electric vehicles (EVs). Electric vehicles, which account for roughly one in twelve sales this year, are set to rise sharply in the coming years.

“This increased market share undermines the monopoly of gasoline (and diesel), limits their production and, in the long run, reduces the total amount of fine atoms required by the industry. But for now, ICE vehicle production is expected to grow.”

In addition, stricter global emissions legislation standards will also benefit the demand for PGM automatic catalysts – ie Euro 7, China 6b and EPA 27/CARB 24 for key markets, but also several improved standards in emerging markets such as PROCONVE L-8 in Brazil.

Aside from the auto-catalyst demand, recycling will also be a major driver of market credits in PGM. In addition to slightly higher overall volumes, the increased availability of catalysts with a higher PGM content and return to the refining pipeline is the main reason for the growth, Metals Focus added.

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

Disclaimer: The opinions expressed in this article are those of the author and may not reflect the views of Kitco Metals Inc. The author has made every effort to ensure the accuracy of the information provided; However, Kitco Metals Inc. cannot. Nor does the author guarantee this accuracy. This article is for informational purposes only. It is not a solicitation to conduct any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. does not accept The author of this article will be liable for losses and/or damages arising from the use of this publication.

Leave a Comment