Platinum prices have been on the upward trajectory and reached the highest plateau in six years. One of the underlying key factors is improving industrial demand. However, the recent push to prices is also owing to growing investors interest who are raising their bets on the precious metal on the back of the vital role platinum would play in the clean energy sector, particularly in hydrogen production.
Investors are probably also lured to trade in the precious metal as platinum is enjoying its piggyback on the mounting market sentiment the hydrogen economy providing recently to the clean energy transition. Meanwhile, the automotive industry is also demanding more platinum in catalytic converters due to stringent environmental rules, placing a floor beneath prices.
Platinum has gained around 22% this year. On Tuesday (at the time of writing this article) platinum traded as high as $1,317.90 an ounce, the highest level since Mid-2014. The prices are still marching upward, and it has been driving palladium higher, increased by 70% over the last 12 months. Despite platinum prices are strengthening it is still hovering below its peers gold and palladium.
Looking at the supply side, Sibanye Stillwater Ltd said on Monday that if the board provides approval this month, the works on its K4 and Klipfontein projects will start this year and would take eight years to complete. That would raise annual production by nearly 250k ounces of PGMs.
In 2020, the COVID-19 pandemic reduced demand by 5% (-410 koz), but supply was down by 18% (-1,524 koz) due to the pandemic, and a major processing outage, Mr Raymond Director of Research at World Platinum Investment Council (WPIC) told H2 Bulletin in an interview.
Heraeus in its latest report said that “Platinum’s price rise is more than is typical seasonally, but with central banks pumping liquidity into the markets, perhaps it is platinum’s turn to benefit from the easy money.”
But the report stated that “…with the burgeoning hydrogen economy drawing attention to its use in PEM-based fuel cells and electrolysers. This is also more about demand in the future than today.” The report pointed out the fact that the platinum’s brighter future and its relative cheapness compared to palladium and gold could see the price continue to trade at a higher level than seen in recent years.