The PGM market: moving on to a new stage?

E-mobility continues to gain momentum worldwide, spurred by stricter environmental regulations affecting motorists and automakers alike. A total of 10.5 million passenger electric vehicles (EV) were sold in 2022, marking a 55% increase from a year earlier (see Fig. 1), while light vehicle sales were 81 million units, 0.5% lower than in 2021 and 15% below pre-2020 levels.[1] As shown in Fig. 2, Chinese manufacturers posted some of the highest EV sales growth rates last year.

These trends may have a negative impact on the platinum group metals (PGM) market. In particular, demand from the auto sector, the largest consumer of these metals as feedstock for catalyst production, is likely to be eroded by the end of this decade.

Last year, automakers tended to shift their interest between palladium and platinum, with preference moving in favor of platinum as a cheaper metal, which traded at $970 per ounce, compared with $2,111 per ounce of palladium (see Fig. 3). In coming years, however, palladium is expected to depreciate further, while platinum is set to return to the growth path.

Supply is yet another unknown, which may upset the apple cart on the PGM market. Palladium output has been on the decline for the third year on the trot, falling by an average of 2.6% per year, while the production of platinum dropped 1% YoY in 2022 after growing 15.7% a year earlier[2] (see Fig. 4). Russian producers, which collectively supply around 42% of global palladium and 11% of global platinum, are forced to scale back output amid mounting geopolitical tensions.[3] South Africa, which produces 74% of the world’s platinum and 38% of all palladium, is also going through rough times: along with high energy bills, local miners are faced with frequent power outages due to old and poorly maintained plants, with blackouts expected to last for at least two more years.[4]

It’s hard to predict how these two conflicting trends are going to work out and whether PGM prices will remain stable. But one thing is sure: this market will soon see major upheavals.