The Doldrum in Platinum – Part I

This article will be the first one in a three part series on Platinum (PPLT). Our objective in this series will be to construct a hypothesis on the outlook for platinum prices using three pillars:

1. Supply-Demand trends
2. State of South Africa and its currency
3. Future of combustion engines

Supply-Demand Trend

The total supply of platinum, on a year over year basis, has declined by 2% but the total demand for platinum has declined by 6%. What is more concerning is that the demand has declined in all but two categories: medical (+2%) & other (+1%), which together only account for about 7% of total platinum demand. In every other category platinum demand has declined: automotive, which represents over 40% of total demand (-2%), jewellery, which represents about 33% of total demand (-1%),  industrial, which represents about 20% of total demand (-9%), investment, which accounted for a little over 6% last year (-50%).

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