Financial News Agency, November 21 (Editor Zhao Hao) On Tuesday (November 21) local time, the latest quarterly report released by the World Platinum Investment Association (WPIC) showed that since industrial demand for platinum will rise to a record high, the agency expects a record gap between supply and demand for this precious metal.

WPIC expects total demand in the global platinum market to increase 26% year over year to 8.15 million ounces in 2023, but supply will drop 3% to 7.079 million ounces. This means that there will be a gap of 1.071 million ounces between supply and demand, which is expected to be the biggest gap since the agency has tracked this data.

There was a clear oversupply of platinum in the previous two years. Supply was 800,000 ounces higher than demand in 2022, and 1.294 million ounces in 2021. WPIC expects the 2024 supply gap to narrow significantly to 353,000 ounces.

Edward Sterck, head of research at WPIC, told the media that platinum mining and recycling have been restricted this year, but the market is still largely dominated by demand. He added that after net divestment in 2021 and 2022, investment demand also turned positive.

Specifically, in terms of demand, the expansion of production capacity in the glass industry and chemical industry has driven the increase in demand in the platinum industry, offsetting the decline in demand in the electrical and petroleum markets. WPIC expects demand for platinum in automobiles to rise 14% this year to a six-year high of 2,367,000 ounces.

Sterck said that although demand will decline somewhat in 2024, it is still likely to be the third strongest year since records began. However, even with such a huge supply and demand deficit, the main price of platinum futures fell by nearly 14% this year, and is now reported at 936.40 US dollars per ounce.

WPIC attributed this year's low platinum price to the “global macroeconomic environment,” where central banks have managed to curb inflation, leading to significant increases in interest rates. Sterck said that in a higher interest rate environment, investors prefer to hold assets that generate returns rather than precious metals that cannot generate returns.

Furthermore, Sterck also believes that automakers may have hoarded high platinum stocks in 2021 and 2022, but due to factors such as the COVID-19 pandemic and semiconductor shortages, automobile production fell short of previous expectations.

However, WPIC believes that auto companies' platinum stocks have been more or less exhausted, and that this potential market fundamentals may be reflected in future prices.