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- What Next For Gold?
By Sachin Patel, Executive Director, Metal Products, CME Group
- SBMA News
By SBMA
- Nothing New under the Sun
By Joshua Rotbart, Managing Director, J. Rotbart & CO.
- What Happens When There is a Loss?
By Allan Finn, Director of Global Commodities, Malca-Amit
- Shanghai Platinum Week Shines Brightly
By Edward Sterck, Director of Research, WPIC
Article List
- What Next For Gold?
By Sachin Patel, Executive Director, Metal Products, CME Group
- SBMA News
By SBMA
- Nothing New under the Sun
By Joshua Rotbart, Managing Director, J. Rotbart & CO.
- What Happens When There is a Loss?
By Allan Finn, Director of Global Commodities, Malca-Amit
- Shanghai Platinum Week Shines Brightly
By Edward Sterck, Director of Research, WPIC
Shanghai Platinum Week Shines Brightly
By Edward Sterck, Director of Research, WPIC
The World Platinum Investment Council (WPIC) co-hosted the 2023 Shanghai Platinum Week (SPW) from June 26 to June 30. The event was a resounding success, solidifying its position as a key annual fixture for the platinum group metal (PGM) industry.
Growing In Influence
Since its inception three years ago, SPW has experienced significant growth. This year’s main event spanned two and a half days, featuring 39 presentations and panel discussions. The conference’s strength lies in its high-quality speakers and breadth of topics discussed, which ranged from global economics and PGM catalysis to the hydrogen economy and China’s role in the investment case for platinum.
More than 1,000 delegates from over 400 organisations attended SPW 2023, with around 180,000 viewers watching the event online. These numbers highlight the event’s scale and appeal. Planning for SPW 2024 is already well underway, scheduled to take place between Monday, 8 July and Friday 12 July 2024.
Representing the respective governments of China, the UK and South Africa, SPW 2023 received speeches from Yuan Guohua (Deputy Secretary of the Party Working Committee of Lin-Gang New Area), Ma Xingfa (Member of the Standing Committee of the Shanghai CPPCC), Sohail Shaikh (Sector Director and Minister Counsellor, UK DFIT), and Phuti Tsipa (South African Consul General to Shanghai, China). This level of support from national, regional and local governments underscores the event’s significance.
Further support for SPW came from the local government of Shanghai’s Lin-Gang Special Area. The establishment of the international PGMs Technology and Trade Centre (PPMC) in Lin-Gang in September 2022 aims to promote PGM use in China, which is already the world’s largest consumer of PGMs, at 25% of total platinum demand. After the main SPW event, WPIC joined dignitaries at the inaugural PPMC Summit at the Lin-Gang Special Area, strengthening ties between Lin-Gang and SPW, with further growth expected in the future.
Connecting The PGM Value Chain
SPW fostered strong engagement across the PGM industry, offering unique networking opportunities. Senior executives from PGM producers Anglo American and Northam Platinum utilised the event to meet existing customers and forge new relationships with other industry participants. Attendees from various industries, including catalyst manufacturers, pharmaceuticals, and hydrogen-related technologies, showcased the wide spectrum of platinum consumers. This included fuel cell producer Hyprin, which showcased one of their fuel cells at the event.
Other exhibitors presented platinum products that ranged jewellery to bars and coins. One of the most interesting developments in platinum jewellery fabrication is electroforming manufacturing techniques, which creates opportunities via a range of new and innovative designs.
Insightful Keynotes
SPW drew a broad range of influential and respected keynote speakers, including Yu Wenjian (Chairman of Shanghai Gold Exchange), John Cullen (Chairman of LPPM), Paul Dunne (CEO Northam Platinum), Benny Oeyen (Executive Head of Market Development, PGMs, Anglo American plc) and Trevor Raymond (CEO, WPIC). Notable corporate attendees included ICBC, China Construction Bank, the Singapore Bullion Market Association, the Japan Bullion Market Association, Johnson Matthey, Heraeus, Guangzhou Futures Exchange, the International Hydrogen Fuel Cell Association, JPX and Metals Focus. The hydrogen venture capital event is an example of the targeted break-out sessions that ran alongside the main presentations.
Key Insights And Market Intelligence
SPW provided invaluable market intelligence and insights, highlighting PGMs’ critical role in enabling new technologies. Discussions focused on medical applications, new uses in semi-conductors, artificial intelligence, and the growing demand for platinum in hydrogen-related applications, particularly in fuel cells.
Three subjects stood out as being potentially significant for future platinum demand: sustainable aviation fuel (SAF); automotive production forecasts for China; and future fuel cell loadings.
Key Takeaways
SAF production is relatively limited today, but the International Air Transport Association (IATA) projects that for the industry to reach net-zero, SAF production must reach 360 Mtpa by 2050. Replacing the use of fossil fuels with SAF is expected to reduce CO2 emissions by 80%. Using data presented by the Dalian Institute of Chemical Physics, we estimate this will require almost 6 Moz of platinum in catalysts by 2050 (cumulative). The timing of SAF additions would see annual platinum demand ranging between 172 koz to 358 koz during the 2030s, although this may displace some existing platinum demand from the production of fossil fuel-based aviation fuel.
Looking at the automotive industry, Tongji University forecasts that China’s automotive production will increase from around 30 million units today to 45 million by 2030 and 45-60 million by 2040. Whilst this must assume that some market share is captured from other producers, it is still a long way ahead of our forecasts for China’s production, which we expect to peak at 35 million vehicles. Assuming the automotive industry in China does achieve the higher production forecasts, we estimate that annual platinum demand would be 200-300 koz higher than on our published base case estimates.
The International Hydrogen Fuel Cell Association (IHFCA) presented a forecast outlook for fuel cell loadings.
The International Hydrogen Fuel Cell Association (IHFCA) presented a forecast outlook for fuel cell loadings. The IHFCA anticipates that loadings for light-duty fuel cell vehicles will be 0.125 g/kW by 2030, which is slightly higher than our estimate of 0.11 g/kW. However, the IHFCA expects fuel cell loadings in heavy-duty vehicles to fall to 0.25 g/kW, significantly less than our projection of 0.41 g/kW. This suggests that the industry is reaching technological maturity and presumably assumes a higher quality of hydrogen fuel going forwards. Using the IHFCA estimates, FCEV demand for platinum in 2030 would be about 190 koz lower than our base case projections; while this is lower, it would reduce some of the pressure on the platinum market in the future.
We took the opportunity to present WPIC’s own supply/demand outlook at the conference, focusing on China’s importance to the investment case for platinum and the platinum industry. This was a highly relevant topic as, in addition to its identified demand, China has been importing substantially more platinum than it seemingly needs. These imports have been so large that there appears to have been a significant flow of material from inventories in the West into China. We estimate that more than 80% of all above-ground stocks are now concentrated in China. As China has export controls on strategic minerals, this means that platinum stocks within in China may not be available to the rest of the world in the event of a supply/demand shortfall, as forecasted to occur in 2023.
In our most recent Platinum Quarterly, published in May, we forecast 2023 platinum supply to fall short of demand, resulting in a deficit of almost 1 million ounces (approximately 31 tonnes).
That said, commodity markets cannot physically be in a deficit; if buyers of a commodity are struggling to source it, then competition should drive prices higher until either additional supply is incentivised into the market, or demand is priced out of the market. Primary mine supply for platinum is highly price inelastic, and given platinum’s critical importance to the automotive industry and numerous other industrial applications, we believe that platinum demand is also largely price inelastic. Filling the supply/demand gap will, therefore. rely on incentivising platinum sales from above-ground stocks. However, as mentioned, with above-ground stocks so concentrated in China, there are significant uncertainties regarding how readily available those stocks are to the broader global market.
A Promising Future For SPW
SPW 2023 impressed attendees with its diverse range of topics, high-quality exhibits, and valuable information. As a pivotal annual event for the platinum industry, SPW is expected to attract even more industry participants in the future. WPIC extends its gratitude to the co-sponsors of SPW 2023: China Gold Association, China Precious Metal Industrial Committee and Anglo American. For more information on SPW, please visit www.shanghaiplatinumweek.com.
EDWARD STERCK is the director of research at the World Platinum Investment Council. His career has encompassed more than 20 years in a combination of mining and finance roles. He is a graduate in geology from the Royal School of Mines and a Fellow of the Geological Society.
