Platinum surges over blackout and demand jitters

London — Platinum prices have shot up as speculators bet that power outages at SA mines and rising demand from carmakers and the hydrogen industry will create supply shortages.

Platinum is used to neutralise harmful engine emissions, as well as in other industries and jewellery. Prices leapt from just above $900/oz in late February to $1,132.17 on April 21 — the highest in more than a year — before easing to about $1,050 by Tuesday.

Speculative investors have expanded their net long position in Nymex platinum futures to 1.5-million ounces from 145,000oz in late-February, exchange data show.

Exchange traded funds (ETFs) storing platinum for their shareholders meanwhile bought about 120,000oz in just a few days in late April, according to the World Platinum Investment Council (WPIC), which tracks funds.

“We think this is the first year of serial deficits in the platinum market,” said Standard Chartered analyst Suki Cooper.

However, Cooper said prices could weaken in the short term before supply risks worsen later in the year.

SA produces 70%-75% of mined platinum supply. Miners in the country have said rolling power cuts could cut their output 5%-15% this year, Cooper said, adding that Russian production may also disappoint.

“We’re now entering the winter period in SA and getting more frequent alerts on power outages,” she said. “The market is concerned.”

Demand from the car industry, the biggest consumer of platinum, should rise 8% this year as vehicle production increases, said StoneX analyst Rhona O’Connell.

O’Connell forecasts a 900,000oz deficit in the about 8-million ounce a-year platinum market this year. The WPIC predicts a shortfall of about 500,000oz.

Investors also hope that large amounts of platinum will be used in the production and use of hydrogen.

But analysts at Macquarie said this could take years. “In our base case, the sector (across fuel cells and PEM electrolysers) would account for about 220,000 [ounces] of demand in 2030 but be approaching 2-million ounces by 2040,” they wrote in a note.

Reuters