Platinum prices experienced a significant surge in January 2024, reaching record highs before a recent pullback, while palladium also saw volatility. This follows increased demand driven by both industrial applications and investment interest.
Platinum Price Performance
Platinum’s spot price decreased by 3.7% to $2,531.84 per ounce as of January 29, 2024, after reaching an all-time high of $2,918.80 on January 22, 2024. The metal rose 56% during January, positioning it for its strongest monthly performance on record.
The primary driver of platinum’s price increase is a combination of supply constraints and growing demand. South Africa, the world’s largest platinum producer, faces logistical challenges and declining production from aging mines. Demand is increasing due to platinum’s role in catalytic converters for vehicles, especially as emissions standards tighten globally, and its growing use in hydrogen fuel cell technology.
For example, the Platinum Guild International reported a 13% increase in automotive platinum demand in the first half of 2023 compared to the same period in 2022. Platinum Guild International – H1 2023 Market Update
Palladium Price Fluctuations
Palladium’s spot price eased 4% to $1,925.50 per ounce on January 29, 2024. While it hasn’t reached the record highs seen in 2022, palladium has experienced significant price swings in recent months.
Palladium is primarily used in catalytic converters for gasoline-powered vehicles. The automotive industry’s shift towards electric vehicles has created uncertainty about long-term palladium demand, contributing to price volatility. However, continued production of internal combustion engine vehicles, particularly in certain markets, sustains demand.
According to data from the World Platinum Investment Council (WPIC), palladium supply is expected to remain tight in the near term.World Platinum Investment Council - Market Reports The WPIC forecasts a deficit in the palladium market for 2024, which could support prices.
Platinum Group Metals (PGMs) and Automotive Industry
Platinum and palladium are both Platinum Group Metals (PGMs) crucial for reducing harmful emissions from vehicles. They act as catalysts, converting pollutants into less harmful substances.
The automotive industry accounts for a considerable portion of PGM demand. Stringent emissions regulations in Europe,china,and the United States drive the need for these metals in catalytic converters. The transition to electric vehicles is expected to gradually reduce PGM demand in the long term, but the pace of this transition varies by region and vehicle type.
The European Automobile Manufacturers Association (ACEA) reports that despite the growth of electric vehicle sales, internal combustion engine vehicles still represent a significant share of the European car fleet.ACEA – Fuel Types this continued demand supports the need for PGMs in the short to medium term.
