Last week, we attended the EM conference of the International Precious Metals Institute IPMI in Vienna. In the flair of this great city, the major challenges of the PGM market were explained in detail. A paradigm shift is imminent. While palladium (Pd) and rhodium (Rh) have brought golden times to the market in the last ten years, the end of combustion engines in the EU in 2035, among other things, appears to be putting significant pressure on the market on the demand side. However, the price reduction beyond 2023 poses further challenges. Critical marks are being reached in the area of producers, as price increases in the energy-intensive mining industry over the last two years have not gone unnoticed. PGM baskets have experienced a price reduction of almost 70 %. New projects are being scrutinized extremely critically, as are existing mine shafts. The closure of less profitable projects is not taboo. One of the largest mining companies, Sibanye-Stillwater, is preparing to cut over 4,000 jobs.
The example of platinum clearly illustrates this, the main metal extracted from mines. Currently, platinum trades at around US$ 900/oz, just below the average AISC (all-in-sustaining costs). In short, an ounce of platinum mined does not currently contribute to the company’s sustainable profit. And now we come to the market opportunities. With production remaining constant or falling, price increases are possible in the medium to long term, if demand remains stable. This at least appears to be the case for platinum.
All in all, we are optimistic about the future. Macroeconomic growth could be positive in 2024, and lower prices will undoubtedly entice other applications out of the reserve, such as the electroplating industry in the Pd and Rh sectors. Hydrogen remains one of the hottest bets on Europe’s energy autonomy – and therefore, also the platinum metals platinum, iridium, and ruthenium.
Finally, a brief word on gold and silver: gold hovers between the US$ 2,000/oz mark and the 200-day line at US$ 1,937/oz. A comfortable price range that keeps the upward momentum always going. Bond yields on the US market are also trading at record highs, and a discount there would also support the gold price. Silver, meanwhile, has broken above the aforementioned 100- and 200-day lines and even briefly traded above US$ 24/oz. This level needs to be defended, but the market seems to be well supplied now, so the focus is increasingly shifting to the relationship with gold.
“PGM – Spotlight on Precious Metals” is a commodity column focused on gold and precious metals but mainly dedicated to the widely discussed yet rarely analyzed platinum group metals (PGM). Focused on the industrial applications of the metals as well as their potential as tangible assets, the abbreviation PGM has a twofold significance: With Philipp Götzl-Mamba, we could win an experienced precious metal trader operating at the cutting edge of the industry, sharing his knowledge with us.
