Our market

Constrained supply, together with increasing global demand for PGMs will results in fundamental deficits for these metals over the medium to long term.

Market perfomance

The platinum, palladium and rhodium markets were in deficit for 2014 due to overall demand growth and the five-month strike in South Africa. However, sentiment – particularly that of short-term players – rather than fundamentals drove prices down during 2014 and the first half of 2015. The unwillingness to trade on the back of platinum’s medium to long-term fundamentals are very much reflected in the lack of interest to buy at low prices.


Overall, 2014 was another relatively positive year for the global automotive industry, which achieved 3% growth for light-duty vehicle sales and exceeded 86 million vehicle sales against a backdrop of increased sales in North America, Western Europe, China and Japan. The 2015 first half year-to-date sales were similarly encouraging. However, growing concerns about financial volatility in the markets may result in the second half being flatter.

The slowing Chinese GDP growth and a cautious consumer attitude towards luxury goods – especially given the Chinese government’s clampdown on gifting – worked against platinum jewellery sales in China. However, increasing business and consumer confidence in other markets offset these losses. The Indian market continued to post double digit growth in 2014, albeit off a low base. Despite the April sales tax hike in Japan, the platinum jewellery market there continued to show positive signs of growth, with consumers purchasing higher purity pieces. The US market delivered good growth on the back of lower price point pieces and increased marketing efforts by retailers.

It is expected that 2015 will continue to be a challenging year, especially in China where the platinum jewellery market is expected to fall by between 3% and 5%. However, the losses in the Chinese market are expected to be partially offset by the robust growth in India of between 25% and 28%, which is largely driven by the Platinum Guild International Evara programme.

The cumulative reduction in the use of platinum in glass and hard disk drives over the last few years has meant decreased demand from these sectors – the glass industry became a net supplier of platinum in 2014. Nevertheless, overall industrial requirements have been strong in 2014 driven largely by chemical, electrical and other applications, for example oxygen sensors.

Both platinum and palladium exchange traded funds (ETFs) grew during 2014, recording growth of 155 000 and 940 000 ounces respectively – driven mainly by South African funds. But there has been little movement during the first half of 2015, with an increase of only 50 000 ounces of platinum since the beginning of the year and palladium 86 000 ounces lower.

On the paper markets, the gross long interest for platinum on the NYMEX has dropped to its lowest level since November 2014. The gross long interest in palladium has followed suit. In contrast, short interest in both platinum and palladium has climbed into record territories – highlighting that investors are not impressed with the performance of prices in the short term.

To this end and to increase transparency on platinum investing, Implats and the other South African platinum producers launched the World Platinum Investment Council (WPIC) in 2014. The aim is to stimulate investor demand for physical platinum. The WPIC will provide investors with information to support informed decisions regarding platinum and will work with financial institutions and market participants to develop the products and channels investors need.

Market fundamentals remain sound and both the platinum and palladium markets remained in deficit in the 2014 calendar year due to strong demand and reduced primary supply as a result of prolonged strike action at South African producers. Despite this, market sentiment and available metal inventories continued to constrain metal prices through the year and into the first half of the 2015 calendar year.


PGM prices have generally remained subdued throughout FY2015. Platinum was down from a high of US$1 520 in early July 2014 to around US$1 080 by financial year end and broke the US$1 000 mark in August 2015, while the other PGMs remained generally flat after an initial peak early in the year. Depressed platinum prices come on the backdrop of a market driven mainly by investor sentiments on stock overhang, rather than by market fundamentals.

International Monetary Fund (IMF) data show continued global economic growth levels of 3.4% in 2014 and an estimated rate of 3.5% for 2015. The main drivers of growth in 2014 were the emerging markets and developing economies, which grew at 4.6%, boosted by China which recorded 7.4%. While the developed countries achieved only 1.8% growth in 2014 (up from 1.4% in 2013) there are signs they will break the 2% growth mark in 2015 and maintain this growth level in 2016. This should be able to keep the global economy above 3.5% in 2016.

These growth figures, however, disguise a growing divergence between economies, in part due to uncertainty as a result of a host of risks, including the varying impacts of currency fluctuations, lower oil prices, geopolitical tensions and financial volatility. Despite its fragility, the global economy is expected to post modest improvement this year. This will be helped in part by the boost to global demand from lower oil prices and policy changes.

In contrast, the decline seen in metal prices – including platinum group metals (PGMs) – may suggest some weakening in demand. However, a closer review shows that PGM prices have been driven more by sentiment on unreported above-ground stocks rather than underlying fundamentals, despite these stocks being drawn down every year without the commensurate reflection in metal pricing. To further complicate the matter, supply from South Africa is expected to be further contained as result of increased input, without taking into account increased labour costs, increased stoppages due to section 54s and community activism as well as power and water constraints.