China and Japan Will Lead the Recovery in Platinum Demand

The global demand for platinum is going to fall by 7.2% this year compared to 2019. It is a result of the drop in demand from the two sectors that consume the most metal: the automotive and the jewelry sectors. However, over the next few years, this demand will recover, with China and Japan as the main drivers.

Automotive and jewelry are the two sectors that consume the most platinum globally, accounting for 34% and 24% of total annual demand, respectively. However, in 2020 these figures have been reduced. The Covid-19 pandemic has impacted on the activity of these sectors and has caused a reduction in their demand. 

According to a report by the GlobalData consultancy, the drop in global demand for platinum stood at 7.2% in 2020. According to Ankita Awasthi, a mining analyst at GlobalData, China and Japan are the world’s two largest consumers of this metal. In fact, their combined demand amounts to 35% of world demand.

The impact of the coronavirus pandemic will be felt in both markets. It is estimated that Chinese demand will fall by 9.2%. Moreover, Japanese demand will decrease by 11.8%, at the end of 2020.

In China, the demand for platinum is going to contract 14% in the jewelry sector and 3.9% in the automotive sector.

Japan forecasts to see demand for the precious metal drop by 14% in the catalyst manufacturing sector. Furthermore, a 12.1% drop in jewelry, and a 7.5% fall in other industrial uses.

However, despite the severe impact of the pandemic in sectors such as the automobile industry, GlobalData is optimistic about the future evolution of the sector. It believes that demand will recover in the coming years thanks to the approval of much stricter legislation on polluting emissions.

Auto Sales dropped 79% in China in February

In the case of China, the country has the largest automobile industry in the world. In fact, it consumes 7.1% of the global annual production of platinum in the manufacture of catalysts.

The country was forced to shut down its industries during the lockdown period. Thus, causing auto sales to drop 79% year-on-year in February and 43% in March.

However, in April they returned to grow by 4.4%. In May they were up 14.5% and in June increased by 11.6%, compared with the same month last year.

The report estimates that, between 2020 and 2024, the demand for platinum by the automotive industry will register a compound annual growth rate of 3.8% globally and 9.5% only in China.

During the period, global demand for platinum will also experience a compound annual growth rate of 4.3%. Meanwhile, demand for platinum in China and Japan will grow at a rate of 5.2% and 2.4%, respectively.

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