Amid forecasts of a rising surplus in the global platinum market that will keep the metal’s price subdued, South African producers are pinning their hopes on makers of petrol autocatalysts using more of the cheaper metal instead of palladium.
Johnson Matthey and the World Platinum Investment Council predict the platinum market will remain firmly in surplus, with the latter forecasting excess supply rising to 680,000oz from 645,000oz in 2018.
The council forecast demand for platinum would increase 5% this year to 7.74-million oz on an “expected significant rise in investment demand.”
Investment demand was expected to be 530,000oz in 2019, it said. This would offset the decline in demand from the key consumers of platinum, namely autocatalysts for diesel engines, jewellery and industrial uses, the council said.
SA production was expected to rise 7% to 4.7-million oz as large producers such as Anglo American Platinum, Impala Platinum and Northam Platinum reduced inventory of metals locked up in processing due to planned smelter rebuilds, it said.
Johnson Matthey said in its February report that SA platinum output had been remarkably stable at about 4.3-million oz in recent years despite closures and cutbacks at unprofitable mines as production at new, lower-cost mines was ramped up.
CEOs of all major platinum companies said in financial results presentations in recent weeks that the big price differential between platinum and palladium — which is in a long-running deficit that is forecast to deepen as above-ground stocks are depleted — could lead to cheaper, more plentiful platinum substituting palladium in petrol engine autocatalysts.
The expectation is this could happen in the next two years as fresh engineering work, tests and permits are signed off and factories re-tooled to use platinum.
Johnson Matthey cautioned against too much optimism on platinum use in petrol or petrol engines.
“With palladium trading at parity with platinum since 2017, and at a widening premium during 2018, there has been some renewed research into the use of platinum in gasoline catalyst applications,” Johnson Matthey said. But test results for platinum and rhodium systems were not as efficient as existing palladium and rhodium systems.
“In particular, palladium has better thermal stability than platinum under typical gasoline exhaust temperatures, which means that catalyst activity remains more consistent over time,” it said.
“Thus, even though it may be theoretically possible to reduce costs by replacing palladium with platinum, there is so far only limited evidence that automakers may be prepared to take the plunge, even in Japan where some automakers have recent experience of the use of platinum-containing catalyst formulations,” it said.
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.