Alexandra PankratyevaThe platinum price has been a relative beacon of strength in the first quarter of 2019. Will the upward trend continue, giving platinum a strong ‘buy’ rating? For now, the experts remain bullish, as the platinum price forecast 2019 shows that global demand is set to increase by 5%.
Platinum price prediction
One of the rarest and purest metals in the world, platinum is armed with distinctive qualities, making it highly valued across a number of different economic segments. Platinum’s unique catalytic and physical properties made it a metal of choice for many industrial applications.
Platinum’s supply comes from 2 major sources – mining output and recycling. The latter comes from jewelry recycling and end of life auto catalysts. Over the last 5 years, around 75% of the total annual platinum supply has come from primary mining.
The world’s platinum demand is becoming more diverse and robust. The four major segments of platinum demand include automotive (41-43%), industrial (22%), jewelry (33%) and investments (the smallest, but powerful segment, ranging from 1-6%).
According to the latest World Platinum Investment Council’s (WPIC) Platinum Quarterly report, the 2019 forecast shows a significant increase in overall platinum demand. It is strengthened by a growing investment demand that offsets a slightly declining demand in the automotive, industrial and jewelry segments.
2019 offers three factors strengthening platinum’s investment segment:
An ongoing disruption of South African mining output may reduce platinum supply, as 95% of the world’s platinum reserves belong to South Africa.
Diesel market recovery in western Europe may increase the demand from the automotive sector. Platinum tends to perform better when the auto industry is in good health.
The increase in the palladium price might make auto manufacturers look for alternative technologies. This may result in further growth for platinum as a replacement for palladium in gasoline cars.
What do the experts say?
Various financial institutions have earmarked different estimates for the platinum price in 2019.
Bank | Platinum price prediction for 2019 |
Deutsche Bank | $820 |
Natixis | $875 |
Commerzbank | $900 |
Standard Chartered | $930 |
ABN AMRO | $1,100 |
TD Securities | $1,031 |
Historically, platinum reached its all-time high of $2,253 per oz in March 2008. Platinum’s record low of $97.70 happened in January 1972. In 2017, the average price for platinum stood at $948 per troy ounce. In 2018, the average platinum price is estimated to be around $1,090. The latest platinum commodity price as of 16 July 2019 hovers around $836.32.
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Platinum’s supply and demand
Supply and demand will always be the primary drivers for platinum prices. Experts believe that, similar to 2018, there will be also a surplus of platinum in 2019. However, the surplus will be smaller and the demand will be greater.
Platinum supply
Despite the accelerating operations at South African mines, the reduced platinum production in Russia and Zimbabwe resulted in a 1% decrease in platinum supply in 2018. According to WPIC’s estimates, the operational disruption continues in 2019.
However, a growth in platinum recycling and increased output from North American and South African mines will boost platinum supply by 2% in 2019. Platinum recycling supply will also contribute to platinum growth, due to a bump in autocatalyst supply, which will offset the decline in jewelry industry.
Platinum demand
Analysts believe the demand for platinum will continue growing in several sectors for the rest of 2019.
Platinum investment
Paul Wilson, the WPIC CEO, shares the view that investment in platinum will continue to rebound this year. What is the trigger that will spur investors' interest in platinum? While the precious metal still experiences a little surplus and the price is relatively low, if compared to palladium and gold, investors may hurry up to add platinum to their investment portfolio.
Platinum jewelry
A rebound in platinum demand can also come from the jewelry sector. After a 2% pullback in 2018, the WPIC predicts a 1% rise for platinum demand this year.
Platinum in industry
Occupying a strong position in the industrial sector and the array of different applications,platinum has good chances to move forward among the precious metal commodities, as the usage of platinum should increase.
There are a lot of talks within the automotive industry about switching from palladium to platinum in the production of catalytic converters for petroleum vehicles, due to a significant price difference between the two precious metals.
Petroleum refining and glass manufacturing will also contribute to the growing demand for platinum, as refining capacity in America and China increases.
Why buy platinum in 2019
Relatively low prices for platinum can make it a commodity of choice for many investors. Buying an asset when the price is relatively low can serve as a good investment strategy, especially in the case of the assets with fundamental market support. Believing in step-by-step recovery for platinum’s price for the rest of 2019, experts predict significant price growth in 2020 and beyond. It means that it may be a good time to diversify your portfolio with platinum before the price breaks out.
