Global platinum demand fell 38% in the first quarter of 2020

The paralysis of economic activity due to control measures has caused a drop in platinum demand in the first quarter of 2020. This is 38% lower than in the same period of 2019.

The World Platinum Investment Council (WPIC) released the latest Platinum Quarterly report for the first quarter of 2020. It revealed a significant drop in demand for platinum between January and March this year.

To be specific, platinum demand was 1.64 million ounces (51.2 Mt), 38% less than in the first quarter of the last year.

The investment sector reduced its demand by 90%, compared to an exceptionally high first quarter for 2019.

Demand for the automobile (-17%) and jewellery (-26%) sectors also fell, while industrial demand dropped by 3%.

According to the report, the impact of the pandemic on the global economy has caused the markets to collapse. It has affected the price of platinum, which suffered declines of between 10% and 35% throughout last March.

The supply of platinum fell in the first quarter of the year to 1.77 million ounces (55 tons). This was from 2.18 million (67.8 tons) in the previous quarter. This represents a drop of 6% over the same period in 2019.

WPIC attributes this fall to the effects of the closure of silver processing by Anglo American Platinum and to the closure of the mines ordered by the Government of South Africa. Both events took place in the last month of the quarter.

These data points place the platinum market in a supply surplus position, oversupplied by 124,000 ounces (3.85 Mt) between January and March of this year.

Forecasts for 2020

WPIC included forecasts in the report on the behaviour of the metal in 2020. According to it, a total platinum supply is estimated at 7.19 million ounces (223.6 tons) in 2020. This is 10% less than the last five years.

The total demand for the metal will account for 6.95 ounces (216.1 tons), 13% less than the average of the last five years, and 18% less than 2019. The drop in demand is caused due to lower demand from the four major sectors: automotive, jewellery, industry, and investment.

The platinum market will face a supply surplus of 247,000 ounces (7.6 tons) at the end of this year, compared to the previously estimated 119,000 ounces (3.7 tons).

However, the demand for platinum bars and coins is expected to grow by 115%, to 605,000 ounces (18.18 Mt), due to little investor interest in refuge assets.