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Industrial metals rallied on Wednesday as expectations for improvements in the global economy raised prospects for demand, sending platinum prices to their highest finish since 2015 and lifting copper to an eight-year high.
“Platinum is carrying a supply-side deficit, and copper stocks are near decade lows” at the London Metal Exchange and Comex, John Caruso, senior asset manager at RJO Futures, told MarketWatch. “This is an indication that these moves in industrial based metals are happening for the ‘right’ reasons: simple supply versus demand and anticipated demand.”
On Comex Wednesday, April platinum PLJ21, +0.21% PL00, +0.21% climbed by $52.50, or 4.4%, to settle at $1,246.90 an ounce. Prices based on the most-active contract settled at their highest since February 2015, according to Dow Jones Market Data.
“Platinum plays an integral role in the electrolysis process in the conversion of green hydrogen, and we know Europe and soon the USA are ‘all in’ on renewable and clean energy fuels,” said Caruso.
Global platinum saw a supply deficit of 390,000 ounces in 2020, as “demand continued to modestly outpace new supply” that year, according to a February 2021 report from Johnson Matthey released Wednesday. The deficit widened from 301,000 ounces in 2019 and in 2018, supplies saw a surplus of 265,000 ounces, the report showed.
World primary platinum supplies contracted by 20%, with outages at Anglo American Platinum’s ANGPY, +2.70% converter plant adding to COVID-related disruptions, while autocatalyst demand for the metal dropped by 22% on the back of a steep decline in European diesel car production, the report said.
Platinum supplies are headed for a third consecutive year of supply deficit in 2021, said Ross Norman, chief executive officer of Metals Daily, estimating that demand may outpace supply by about 240,000 ounces this year. Demand is strong from China, with car sales up 30% year on year at 2.5 million units — the 10th straight month of gains, he said.
Emissions standards are tightening, which infers higher demand for platinum group metals, Norman said, and “in a post-COVID-19 world, we forecast a solid recovery in global auto sales.” Platinum is mostly used in auto catalysts for diesel-powered vehicles.
The latest energy shutdowns in South Africa have also contributed to platinum’s rise, said Adrian Ash, director of research at BullionVault. Those have added over $100 an ounce to platinum prices so far this week, he said.
“This is the kind of news and response platinum got during its surge to $2,000 in the early 2000s,” said Ash. “It’s a real scandal for what used to be Africa’s No. 1 economy that [power utility] Eskom’s problems have actually worsened since then.” The power issues have led to slower platinum production.
Meanwhile, “strong copper demand is coming from global manufacturing from the likes of China, and anticipated infrastructure spending in the U.S. Chinese copper inventories are near decade lows,” Caruso said.
The copper market is “centered on tightening supply and undying hopes of a U.S. stimulus package,” analysts at Zaner Metals wrote in a Wednesday note. “The significant range up move this week [for prices], suggests copper is in the midst of signaling an improvement in global economic conditions directly ahead.”
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