from BMO Year end Metal Report - Platinum Platinum
In summary. Platinum has amassed a large inventory overhang in recent years, instigated by diesel’s
falling share of the auto market through a period of flat supply and falling jewellery demand. Therefore,
platinum’s significance within the PGM 4E basket has fallen progressively, while the metal’s inelastic
supply profile continues to prevent market forces from taking their course.
Short term outlook. Platinum-palladium and platinum-gold spreads reached all-time highs at various
points in 2020 but have somewhat closed in recent months as investor emphasis further transitions to
prioritising projects with a low-carbon footprint. Green hydrogen fits in here, and with platinum’s key role
as a catalyst in electrolysis, it’s becoming increasingly in vogue. Equally, the price differential to its major
alternatives in traditional end-demand uses, such as jewellery and autocatalysts, continues to incentivise
substitution, putting a floor under current prices.
Long-term outlook. As has been a theme throughout this report, we view scrap as key to providing
incremental units to commodity markets over the coming decade. On a five-year view, we anticipate
~100koz of additional platinum units from scrap versus current levels, contrasted by consistent primary
supply. Meanwhile, platinum’s role in the push to clean up global emissions is perhaps underappreciated,
both in the mid-term through ongoing advancements to emissions standards, as well as further down the
road with its role in green hydrogen. China VIa, due to be enforced for heavy-duty vehicles in mid-2021, is
one such example of major policy shifts that could have a meaningful bearing on the market.