A significant surge in platinum prices is on the horizon, Dr. David Davis, a veteran of the South African mining and investment industry, predicts. With 45 years of experience in platinum-group metals, gold, and uranium, Davis offers this forecast in a comprehensive 25-page review for Auctus Metal Portfolios of Singapore.
Davis points to a concerning trend: the declining supply of platinum from South African mines, coupled with overwhelming demand, signals a price hike. His analysis reveals that the Western Europe and UK platinum inventories are critically low, entering what he terms a’red zone’.
China’s role is pivotal. Since 2009, the country has been purchasing more platinum than it needs without exporting any. This leaves the global market reliant on the US’s above-ground platinum inventory, which comes at a premium. Additionally, dwindling primary mine supplies and unlikely boosts in recycling further tighten the market.
“We are on the brink of a substantial rise in platinum prices,” Davis asserts, citing the imminent impact of the global supply-demand deficit. His calculations estimate China’s above-ground inventory at a staggering 12 million ounces, a significant 57% of the global 21.2-million-ounce total.
This inaccessible Chinese stockpile impacts the Western world, potentially slowing global decarbonisation efforts. Davis pegs the US above-ground inventory at 8.1 million ounces and Japan’s at 1.8 million, with inventories in Western Europe, the UK, and elsewhere nearly depleted.
“It’s crucial for the industry to rethink its strategy and adopt a realistic market balance approach,” Davis advises in his review, as shared with Mining Weekly. He criticises the current simplistic supply-demand models, advocating for a more nuanced understanding of the platinum market, including regional distribution and inventory volumes.
According to a report by Mining Weekly, Davis suggests a lack of accurate insights into the changes in platinum inventories from 2007 to 2022 within the platinum-group metals sector, investment industry, research organisations, and other stakeholders. He stresses the importance of understanding the location and mobility of vaulted platinum stocks in predicting supply longevity and price movements.
As the platinum market approaches a critical low point, Davis’s insights highlight the urgency for a strategic reassessment in the face of an impending platinum price surge.
