[Music] I'm Charlotte Mloud with investingnews.com and here today with me is Edward Sturk, director of research at the World Platinum Investment Council. Thank you so much for being here. Great to have you once again. Charlotte, thanks very much for the for the kind invitation. It's always a pleasure to participate. Really good to be catching up. And I didn't realize you told me before we turned the camera on, it's actually platinum week right now. So, you've been really busy all week with not just the


World Platinum Investment Council's new report, but lots of things going on. So, I wondered if we could just begin there and maybe take about some of your takeaways from the event. No, absolutely. I mean, it's uh it's a packed schedule. Um it kind of started last Friday really um and is continuing through to today. Uh and you describe it. It's London Platinum Week. There there are three platinum weeks around the world. London in May, Shanghai in July, and then um New York in September.


And London and New York are kind of interesting in that, you know, they're not really conferences so much. It was an accidental gathering of people from all around the world in the same industry in the same city at roughly the same time. Um but everyone has their own different events. Um, you know, there's lots of different interesting angles that one appears because you've really got everyone there from the producers through to um, yeah, all of the different end users, the recycling


companies that sit in between, the you catalyst fabricators, jewelry fabricators and so on. And of course, you've also got the investment community there as well. Um so in terms of the main takeaways I think you know firstly we've seen actually a fairly decent price performance from platinum and palladium actually through the course of this week. Um and you know it feels like that may be in response to some of the things that people have discovered um through the course of the different


events. My key my key takeaway is actually probably the ones that that really we provided as WPIC to people and which were insights into the their ongoing strength in the platinum investment market that's bars and coins in China and also how that's feeding through to the jewelry market in China as well. So we're seeing significant growth there and really rapid. Now you know it's worth noting that the jewelry market can kind of be divided into two categories. So you've got your sort of


high-end goods and then you've got the kind of high quality but lower margin uh quasi investment type goods in Asia. And so that's where we're seeing this demand strength which is why I'm sort of linking it to the investment demand. Um but to give you some context in the first quarter of this year alone given the exceptionally high gold price gold jewelry sales in China were down 32% quarteron quarter and platinum sales were up 26% yearon year. say and I'm very cautious on caution year on year


there but um but you know effectively effectively those contrasting um uh sort of experiences from from two metals why is the Chinese industry kind of adopting platinum now we got high gold prices obviously part of that um you know I think that's pricing consumers out of the market not so much because of the high price as much as possibly you know perception that there is more downside risk to gold from here than the contrast you perhaps upside potential for platform, but also for the fabricators and retailers, they're


reacting to those falling gold sales by looking to provide alternative products to their cloud base. Um, they're also by pivoting to metals apart from gold, you know, that helps them release working capital. Um, so, you know, it's it's it's quite encouraging for them. Uh, you know, China's a market that can pivot really quickly. We're seeing investor products being sold on Tik Tok there. There's a lot of social influences getting behind this and I just had a an email today from colleague um in China


who was comparing footfall and platinum versus gold stores and everyone seems to have platinum stores and watching the gold. So yeah, it's a lot of encouraging news coming out of out of out of China. Couple of other takeaways. Um just on the uh the vehicle emissions side, some regulatory changes that look like they're coming through in China and in the US that could be positive for automotive demand for platinum. So although we are seeing this ongoing electrification of the global drivetrain, albeit at slower rates than


we've seen historically, actually from a a demar perspective, there is some upside potential. Maybe a bit too early to bake into forecasts, but certainly encouraging. Okay, really, really good to start with those takeaways. I think it's always so interesting to go to events and hear what everybody's talking about there. So, we'll start delving into a little bit more of the WPIC's Q1 report on platinum. And I think one of the big overarching takeaways is the market is looking like it's going to be in deficit


for the third year in a row. And I believe for Q1, it was the biggest single quarter deficit in something like 6 years. So maybe we can take a look at what's going on there and why we had Q1 stand out as a as a core that was in such a large deficit. Yeah. So our our quarterly time series goes back to 2013 and in fact Q1 of this year would have been the deepest um deficit of any quarter in our time series but it's just with the exception of co in you know the first quarter of 2020 and that was also impacted by um an


outage and a smelter in South Africa as well. Um but yeah overall very very weak we we saw um you know mine supply struggle during the quarter. uh production in South Africa was impacted by flooding events, a number of flooding events actually heavy rains all there overall uh and also some smelter outages. Um output from uh Zimbabwe was also impacted by by smelter outage uh and output from North America impacted by restructuring of operations there on on economic grounds. So my supply extremely constrained. There was a


little bit of an improvement in recycling supply um but not enough to compensate for that uh reduced output uh from the mining producers. On the demand side um things look strong. I mean we just touched upon uh you know platin and jewelry demand in China specifically being up so strongly but actually we also saw broader growth um in the rest of the world as well which is a continuing theme for the rest of the world against China. Um in terms of investment demand again you actually really strong numbers uh from China in


particular a bit of weakness from North America um in contrast perhaps relates to in some some degree to tariffs and we should probably come back to that in a minute but um but look I mean overall you there was um there was pretty robust demand growth in those segments a little bit of um you know erosion to demand in terms of industrial demand that's mainly led by cyclical reduction in in new plask caciditions but automated demand for the quarter was actually pretty uh pretty steady as well. The story for the


automotive on on an annual basis is a little bit different but for the quarter itself just very weak supply and very strong demand. One other thing to highlight that boosted demand in fact is tariff related and and that's in terms of um non-borrow coin but um exchange stock movement which we which falls under investment demand for us and so based on the back of tariff fears in the US um we saw a lot of end users look to import metal into the US um ahead of tariffs coming in because they there was


a lot of uncertainty as to whether tariffs would apply to to platinum and the other PGMs. Um and that draw of metal into the US resulted in um some some pretty strong tango in the NYX futures market. For speculators that created an arbitrage opportunity so you go short uh the out months and go long in the spot market and capture that uh value differential as as time closed that disconnect. Of course to go short in the out months you have to put you have to fatalize those positions. So we saw significant exchange stock movements


um into NX bond warehouses and that that very much helped boost the Q1 investment figure. We have started seeing as tariff fears have abated a bit some of those warehouse inventories unwind a little but we're not necessarily seeing that metal move back to Europe. It seems to be stuck in North America. Um and it's worth noting actually that we still see significant market tightness. So we've got high lease rates, historically elevated lease rates. Um and we've also got uh an OTC market in Europe that's in


strong backlation. Both of those are are signals of um you know pretty tight market conditions. Yeah, I think definitely tariffs were on my mind to talk about today because when we last spoke all the way back in March, we were still kind of in that limbo time. Although I guess in a way we are still in tariff limbo, but we really didn't know then how it was going to pan out. So good overview I think of what's been how tariffs have been impacting the platinum market so far. Is there is there anything further you can say about


how the effects we might see heading further into 2025? Yeah, on the tariff front I think there are um you know that's broadly three three main areas where where there is an impact and certainly you know I think as things stand at the moment based upon our current knowledge of tariffs these are baked into our estimates. So firstly before getting into that I should I should say that platinum in its raw forms is not subject to tariff. So platinum ingot sponge and bar um you know those that's the kind of the raw


form of of metal. Uh it's it's a critical mineral to most uh national governments around the world and so the US has chosen to exempt them from tariffs. However, there are some platinum products that are tariffed. So um uh cost bars and minted bars that are that are not legal tender are subject to tariffs. Um and that may be one of the factors behind metal flows between Europe and the US and perhaps North Africa at the moment. Um but minted coins that are legal terms are exempted. So with that in mind from an investment


point of view thinking about US investment specifically you know that's a lot about 70% of the US investment market was minted bars and so they are subject to tariffs and it's uncertain exactly what that will mean in terms of development uh platform going forwards within within the US at least for this year. So our numbers have been just slightly lower there for the full year. The other area of course you know fabricated products that contain platinum are subject to tariffs and that could include jewelry. Uh Europe is


quite a a significant producer of high-end jewelry that is exported around the world included to the US and so there may be a bit of downside risk to jewelry demand there. I would note though that the US does have quite significant domestic capacity for jewelry fabrication. say there's potential that the onshoring that Trump has tried to achieve with these tariffs will actually um sort of offset that uh that that downside risk. The other area of course is vacants and certainly you know where where the tariffs were first


kind of raised and probably still the most robust considering we've seen a lot of broke back of tariff threats in other areas but it's on the automotive industry. Um however you know there is a uh price elasticity factor fundamentally tariffs are going to increase the cost of vehicles within the US. You know even if your onsuring production there actually was or was moved overseas for for on economic grounds. So vehicle costs are going to go up on our numbers every 1% increase in vehicle prices in


the US reduces demand on a for new vehicles by half a percent. and translating that into automotive demand, it works out at being about 50,000 ounces lower platin demand for 2025 and that's how the automotive figure has been reduced by. So we think we think the tariff risks that the automotive industry as it stands are have factored in. One thing I would say though is that the Trump administration has shown willingness to give exemptions to automotive tariffs. The UK is an example where um what's the only example so far,


but a recently negotiated deal um means that the 25% tariffs that have applied to vehicles produced outside of the US are not applied to UK produced vehicles. The first 100,000 vehicles only attract a 10% tariff. Not as good as where we were last year on, you know, much lower tariff rates, but it's still better than 25%. But it shows the willingness uh to negotiate and that implications for other countries and so therefore the real tariff automotive tariff threat. Very very tricky to talk about the


tariffs right now. So appreciate you going into that and I think you've covered investment demand for platinum fairly well. We talked about the the tariff related movements. You're speaking about what's going on in China with people starting to maybe favor platinum over gold. are these dynamics I guess it was quite strong in in Q1 for investment demand. Is that expected to continue as the year goes on or or will we see some mitigation there? I think um I think overall we would expect it to


broadly continue. Um you know as as things stand at the moment what we're seeing in terms of investment momentum is is running ahead of the numbers that we uh published in our platinum quarterly. Um so you know there it depends upon the pace of momentum for the rest of the year. You know maybe there's some downside at risk in um in the US but certainly we're just seeing China continue to go uh through strength to strength. So um yeah like I say you know what we're seeing in terms of on


the ground numbers is higher than we've put out um uh this week. Um so there is some upside potential that this momentum is sustained. Okay. and that that investment demand strength I believe was kind of balancing out the little bit of weakness in the industrial side and the report goes into how this is going back to things going on in the glass market. So curious if you can go into what is happening there. Yeah. So if you if you recall from our previous conversations for a lot of the industrial applications


platinum is not consumed um in the production process. there's a little bit of loss of you know through through through wastage but overall um there is platinum isn't isn't consumable. So really what we're looking at is when you build a new industrial facility the the big devs when those facilities are commissioned and you populate them in the platinum required to operate this facilities and glass is like that. So when you build it, you populate it with the platlin radium alloy that's used to


create the glass bushings. For example, the glass fiber, the fiberglass drawn through all the casting vessels for high quality um glass select for LCD consumer electronic screens. Um and so as a result, it's the it's the momentum of new capacity additions that has the biggest driving effect upon um gas demand for batter. Now, we we've just happened to have had 5 years of really significant above average capacity additions, and we're just entering a natural cyclical downturn from that. And


so, that's what's reflected in in the numbers for this year. Okay, let's let's head over and take a look at what's going on with supply because that's that's quite interesting, too. I believe it was down 10% yearon year in the first quarter and for 2025 forecast to come in at the lowest level in 5 years. So for this past quarter, it sounds like there were some maybe unexpected disruptions, but I'm wondering if you can go on uh go over what we've been seeing in terms of


supply, especially the the mine supply. Yeah, so you know, I think a bit like the quarter actually, if you exclude 2020, the co um with the like I said that that furnace outage in in South Africa also having an effect in that year. Um mine supply this year is projected to be at its lowest level since I think it's since the 90s. I think it's 1998. So it's a really long time and you know effectively we're just seeing um a situation where although we've got these deficits for flatten and


actually for plium too right now we're not seeing that really being flexed in price there's a buffer stocks that are helping to balance the market. We think that those are depleting to unsustainable levels, platinum in particular. Um, but you coming back to that later perhaps for for for the miners, they had to deal with comparatively low metal prices and so that's weighing on their economics and as a result you know they've been restructuring over the last couple of years that's resulted in um some direct


erosion of m supply but we're also seeing them being fiscally cautious and really cutting back on things like capex. So trying to minimize their expenditure and what we've seen over the last capex the previous capex down cycles is that that just gradually erodess mine supply output over time. So it's it's not a massive number. It's t typically about a -2% kag um but but you know over a few years which is what we we've held that begins to have a meaningful impact and it's pretty


difficult to see that trend switching right now. You know, I'd also add that let's say hypothetically we saw metals pricing begin to begin to react to the underlying supply demand shortfalls and it's really difficult for these deep level underground lines to react quickly. They're very price aspect and you know that that's just a function of the fact you're operating at depth in tabular bodies. It's very difficult to flex output for all those bodies. So you the reality is even if we have a run in


prices we're unlikely to see a significant uh change in w supply. Um touching on recycling briefly um you we're in a secular downturn in recycling again you know recycling is actually quite sort of recycling volumes are quite sort of price positive in a way in terms of their relationships with low metals prices you tend to see um the recycling economics are quite challenging and so relatively low recycling rates. We are seeing that improve a little bit in central tropes particularly in China. Um and


stabilization in North America and Europe. Um but certainly there's no reason to expect a significant increase in recycling this year but a modest uplift from the from the the significant lows that we reported for 2024. On on the note of mine supply, is there any chance with the higher gold price we see gold miners ramping up their production? Maybe we get more platinum as as a byproduct of that is what are your thoughts there? I mean I you I don't watch what the gold mines are doing particularly but but there aren't


um as far as I'm aware I don't think any of them really produce material amounts of platinum as as as byproducts. So it's more it's more the gold as byproducts or the PGM market. Okay, makes a lot of sense. And of course we we've got to talk about what's going on with the price. And usually when we have these conversations, we talk about how it's still rangebound, but as you're mentioning at the beginning of the conversation this week during during platinum week, there's


actually been some price movements. So any thoughts? I know it's tough to make price predictions, but any thoughts on prices in 2025 and if that that rise we've seen lately is sustainable. So I mean given the nature of the organization we are, we can't forecast price. Um but just to say you know I think yes as you mentioned I've talked for quite a long time about this rangebound price activity and how range has been pinching out you with the price response we've seen this week we've


definitely gone through the top end of that wedge you can have that occur still kind of we haven't gone too far through it it's not fundamentally structurally broken the range um so we may come back into it um but certainly yeah given that we're seeing that market tightness in highly rates and backation in the ATC market does feel like things are a bit different right now. So, you know, cautiously optimistic. Um it feels like as as we're as that range is pinching out, we're definitely getting to a point


where you it seems um highly likely that that the pling price will begin to reflect the underlying deficits and the fact that these above ground stocks are are depleting to unsustainable levels. Um so, we'll have to wait and see. Very fair. So, we won't we won't get too excited just yet, but we'll we'll see how it goes. We'll keep watching. Okay. I I think that was a pretty good rundown of supply and demand aspects of the report. Any final thoughts you would leave platinum investors with at this


time? Look, I mean, I think platinum's fundamentals are just highly attractive at the moment. You've got really constrained supply. you've got demand um that is actually beginning to to show some real signs of growth driven principally by an inflection in jewelry demand um and by you know ongoing growth in investment demand and so given those things are resulting in these these really significant deficits. This is the third year of horse million ounces deficit out of 8 million ounce market


that those are just rapidly depleting their above ground stocks as I've already mentioned by the end of this year we get down to only just 3 months of demort of rule of thumb 6 months um that is considered to be a sustainable level in commodity markets. So you know this is all generally coming together as a perfect storm. we are seeing that tightness in the market and I feel I feel quite optimistic that we're going to see that long awaited price response um come through. Okay. Well, I I will


certainly cross my fingers that everything continues to come together. So, thank you so much for coming on to talk about platinum. This was really useful and we'll see you again very soon. Thanks Charlotte. Of course. And once again, I'm Charlotte Mloud with investingnews.com and this is Edward Sturk with the WPIC. Thank you for watching. If you like this video, make sure you hit the like button and subscribe to our channel. We'd also love to hear your thoughts, so leave us a comment below.


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