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Slight decline in platinum projected

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ZIMBABWE’S platinum output is expected to register a modest decline of 3% (-14 koz) (a koz is thousand ounces) this year, as new mine development mostly offsets declines at two mines nearing their end-of-life.

MERLIN GARWE

Production from Zimbabwe kept to levels similar to the previous few quarters in the last quarter of 2020.
A World Platinum Investment Council (WPIC) report shows that the 13% (+14 koz) year-on-year increase that Zimbabwe registered during 2020 was on the back of disruptions caused by furnace rebuild in 2019.


The Covid-19 pandemic affected platinum production in several countries, including in North America, but this was not the case in countries such as Russia and Zimbabwe.

“Elsewhere, operations continued largely undisrupted achieving planned volumes. In Zimbabwe, miners were allowed to continue through the country’s lockdown, with only one mine impacted,” the WIPC said.


“Country output increased 5% year-on-year (+21 koz) to 476 koz, reflecting disruptions in 2019 from a furnace rebuild. Russian output is expected to remain little changed, declining 2% (-14 koz) year-on-year to 690 koz. North American output is forecast to reach 374 koz, up 11% (+38 koz), as by-product output from nickel mining stabilises and growth from a primary producer comes online.”

The platinum market is forecast to remain in deficit for the third consecutive year with the modest deficit of -60 koz resulting from a 17% increase in total supply and a 3% increase in total demand. 
Interestingly, total supply in 2021 is seen 3% lower than in 2019, with industrial, jewellery and automotive demand levels all above their respective levels in 2019.


Total platinum demand in 2020 was 7,738 koz, 7% (-569 koz) lower than in 2019. Automotive demand declined by 17% (-474 koz) year-on-year, largely due to lower vehicle sales in the first half of the year, as measures to control the spread of Covid-19 resulted in vehicle factory and showroom closures. 

However, platinum automotive demand losses were cushioned by the impact of higher metal loadings on catalysts to meet tighter emissions regulations while jewellery demand was similarly impacted in 2020, with volumes 13% (-279 koz) lower on a full-year basis despite quarter four demand returning to pre-pandemic levels.


Industrial demand was 5% (-111 koz) lower, with strong glass sector demand largely compensating for weakness in all other industrial demand segments.

“In 2020, weakness in automotive, jewellery and industrial demand was partly offset by strong investment demand, from bars and coins and ETFs, collectively up 24% (+295 koz) year-on-year.

Heightened global risk drove investor demand for hard assets such as platinum during the first half of the year, further encouraged by the weak platinum price.

“Investment demand increased in line with the improving economic outlook in the second half of 2020 and was bolstered by NYMEX futures exchange physical metal stocks, that increased significantly to address the disconnect between the price of platinum futures and platinum,” the WPIC said.

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