Don’t expect the shine to return to the platinum industry any time soon, Deutsche Bank has warned.
Strikes and weak global demand have taken a heavy toll on the price already but the German bank warned today of another threat in the shape of electric cars and their impact on exhaust catalyst demand.
Deutsche Bank predicts demand for platinum and its associated metals rhodium and palladium will grow at 1.1% a year compound or half the historic rate.
“The rising market share of electric vehicles, increasing recycling volumes and the current raft of supply additions (enough to offset depletion), should lead to "marginal cost" prices,” it predicts.
Things improve by the middle of the next decade, but only due to the reduction in capacity as uneconomic mines close.
Deutsche sees electric vehicles nearing an inflection point as they reach cost-parity with conventional vehicles.
Electrics may have 20% of the market by 2030, though growth in hydrogen fuel cell-powered cars that contain a relatively high amount of platinum group metals may provide some respite.
Indeed, recycling of used catalysts means the auto industry will be a net supplier of platinum until 2020 and be almost self-sufficient until 2030 even with demand rising by 1.5Moz of platinum.
As little as 300,000 oz may be required to meet this additional demand by 2030, adds DB.
It expects a cumulative market deficit of 100–300,000 ounces over the next seven years, “essentially a balanced market”.
Anglo American division Amplats (LON:AAL) is its preferred stock due to the quality of its asset base and the ability to streamline its portfolio.