By Yusuf Khan
The platinum group metals market is expected to tighten in 2022 as supply chain disruptions in Russia and South Africa create significant supply risks.
PGM prices have fluctuated wildly in the first half of this year and the outlook remains highly uncertain amid fears of disruption within the global supply chain, Johnson Matthey said in a report on Monday.
The British chemicals company said South Africa is expected to produce 130.8 tonnes of platinum in 2022, while North America and Zimbabwe are expected to produce 9.9 tonnes and 15.5 tonnes respectively. He did not give an estimate of Russian supply due to uncertainty surrounding sales from the region.
This total production of 161.7 tons outside Russia represents a significant tightening compared to 2021, during which 172.9 tons of platinum were produced.
Palladium production outside Russia is also expected to fall to 4 million ounces this year from 4.1 million ounces in 2021. Russia accounts for nearly 40% of global palladium supply, creating greater uncertainty as to the production of the metal compared to other PGMs.
Supply of rhodium, a minor PGM mainly used in automotive catalysts, is expected to reach 644,000 ounces this year excluding Russia, down from 711,000 in 2021, with Russia being a more minor producer in the field. That said, South Africa, the world’s largest producer, is expected to experience an 11% drop in production.
On the demand side, 211.6 tons of platinum are expected to be consumed in 2022, compared to 210 tons in 2021, mainly by the automotive and jewelry sectors. Demand is expected to increase slightly to 10.1 million ounces of palladium, although more than 3.2 million ounces are expected to come from recycled sources. Rhodium demand will be just over one million ounces, up about 50,000 ounces from 2021.
Due to higher demand and lower production, Johnson Matthey expects the PGM market to tighten significantly, with a shrinking surplus of platinum, while palladium and rhodium will be probably in deficit.
“The war in Ukraine has created significant supply risks, given Russia’s position as the world’s largest supplier of primary palladium and a significant producer of platinum and rhodium,” Johnson Matthey said, adding that the crisis should “exacerbate existing supply difficulties”. chains, increase inflation and slow economic growth. »
Last month, the London Platinum and Palladium Market, an over-the-counter precious metals trading hub, suspended two Russian refiners from its commodity delivery list, prohibiting the transfer of licensed material to one of the largest major PGM hubs in the world.
Although air shipments to Asia are still possible, there remains great uncertainty as to how much Norilsk Nickel will supply, as it may be difficult for the miner to gain access to Western mining equipment.
South African production also remains at risk due to major disruptions in the region. Planned maintenance and the risk of strikes are likely to hamper production, while mined stocks that had built up during the pandemic have now been largely refined and processed as well.
Chinese demand was also highlighted as a concern, as although strong automotive demand is likely in the second half of this year, ongoing supply chain issues remain a risk.
Write to Yusuf Khan at firstname.lastname@example.org