WiPGM Newsletter July 2021
29 July 2021 \ Kirthanya Pillay
As yet another quarter of the “new normal” passes, we hope this newsletter finds our members and your families in good health, both physically and mentally!
Great strides have been made across the globe to control the pandemic and as life slowly starts to return to some normality, we hope that you are feeling strong and positive for the future, on both a personal and professional level. As we write this, we recognize that our fight against this pandemic is not over and it requires the commitment of our collective societies to remain vigilant and support the efforts to reduce transmission and return to normality. The economic and social toll remains unreckoned, and we remind our members that the WiPGMs network is here for our members to connect.
Despite these challenges, the resilience of the PGM markets and prices has been truly remarkable, with a number of interesting and exciting themes continuing to grow and emerge as illustrated at the most recent industry event, the virtual London Platinum Week held in May 2021. Despite the absence of face to face interactions, the strong networks and virtual meet-ups facilitated critical analysis and enabled interesting ideas to flourish. Strong themes that emerged were the valuable role PGMs play in the health and medical sectors and the increasing urgency to focus on achieving global carbon neutrality, all of which bodes well for the future of PGMs.
WiPGMs continues to grow from strength to strength, driven by you, our members and community who we love connecting with through our social media platforms, quarterly events and Member newsletter. To this end, please read on for the latest happenings and feedback in our July newsletter.
May Virtual Networking Event
We know the Zoom virtual meeting medium instill fears of dread into many of us after nearly 18 months of online engagements, so we were really pleased to see such a fantastic response to our most recent virtual event, held on 18 May 2021.
The event, held at the end of London Platinum Week 2021, was a great success with nearly 70 attendees from 12 countries joining us to cover a virtual wrap-up of the key themes making waves at Platinum Week and setting the scene for the next 12 months. The event featured four panelists speaking across a range of topics including the industry’s role in market development, the increasing importance of recycling and the latest developments in PGM product development.
The insightful presentations gave our attendees much food for thought across these very topical and far-reaching issues for our industry, and we would like to extend our sincere thanks to our speakers – Fahmida Smith, Ruth Leland, Marguerite Doyle and Rona Durborow – for making the time to share their vast knowledge and experience with WiPGMs.
Thank you to you our members for also participating and taking the time to participate and engage with our speakers and the broader network. We hope it was a worthwhile and timely event given the significant developments in our industry.
We are excited at the prospect of in-person events at some of our regional locations which are opening up over the next few months. We hope to continue our virtual events for our global member base who cannot travel and attend in person, and look forward to a number of events in parallel to provide our members with the networking opportunities and engagements we have missed over the past year.
We are aiming for our next event during the week of 20 September, 2021. Please keep an eye out on our social media pages and website for further updates.
Members Portal Update
We have been working on our Member Portal, which we are very excited to launch in the coming weeks on our website. The Portal will provide a platform for our members to register their details with WiPGMs, with the option to be profiled on our website and social media pages. Members can also register their interest to act as mentors or mentees within the WiPGMs community and offer their services for speaking events, if they wish to do so.
We think the portal will be a fantastic platform to create or enhance the profile of our members and will communicate to you when the website is ready for members to register their details.
Update on WiPGMs Board
The WiPGMs board is thrilled to welcome new Board member, Yana Stunis, who joined us in June 2021 and is based in the UK. Yana will focus on establishing our European chapter and set up networking events and outreach and development programmes in the UK and Europe.
Yana is a Precious Metals Sales Manager at Anglo American Platinum and has over 15 years of experience in the financial services, commodities, and technology industries. She has held a number of front office, business development and Risk roles at top tier global institutions and technology start-ups. She is a member of the Innovation Investing Special Interest Group for the CFA UK.
Yana is currently leading a number of efforts related to the Sustainability and Net-Zero transition in the commodities sector helping unlock efficient, sustainable and transparent use of human and natural resources, whilst maintaining regulatory compliance and business value. The initiatives utilise the latest technology trends, as well as digital transformation capabilities, including Blockchain.
Yana is an energetic and entrepreneurial minded thought leader. In her spare time she enjoys outdoor activities and is a keen runner, having participated in marathons spanning major continents.
The Board looks forward to the valuable contribution and insights we know Yana will bring to our growing global community!
As part of our commitment to grow the networks globally, we have identified that strengthening and developing the regional platforms will assist in creating more focused communities who can engage on a more regular basis. We have resolved that our Board members in each jurisdiction will develop regional chapters, including appointing Regional Chapter Representatives on the ground.
We are delighted that Emma Chapman has agreed to join us and committed her time, expertise and know-how to assist Kirthanya in establishing and developing the South African and EMEA chapter.
We will be reaching out to members within the regions to announce the development and structure of the regional chapters in the coming weeks. We would like to extend an invitation to members to come forward should you wish to form part of the regional board and help shape the future of the local as well as global initiative of WiPGMs.
Profiling our Community
Our community represent some of the most diverse and experienced minds in the global PGM industry and we love profiling their work and insights with our members. This quarter’s spotlight focuses on the bright minds involved on the PGM sales side and we showcase some interesting views from Peggy Chang, HBSC Managing Director and Head of Metals Origination, APAC below.
The pandemic has had something of a contagion effect on the precious metals market. Lockdowns caused supply chain disruption, while travel and end-use sectors were severely subdued. Negative impact on employment, incomes and consumer sentiment also stifled demand in discretionary segments like jewellery. Pandemic aside, PGM supply was also impacted by disruption to mining production and processing capacity in South Africa. Heightened risk, COVID-19 and unprecedented fiscal and monetary stimulus by central banks around the world also pushed all precious metals prices higher.
Amid this backdrop, the impact on the PGM industry and investment demand has been mixed, with some areas more resilient than others in 2020.
1. Jewellery – retail demand was hit hard by lockdowns, extended store closures, subdued consumer sentiment as a result of economic uncertainty and rising metal prices. Asian jewelry consumption fell by 35% in 2020 according to Metal Focus’s November edition. Mainland China and India (accounting for 60% of global consumption) shrank by 37%. Hong Kong saw a 41% year-on-year decrease between January and May 2020 (HKTDC data). Platinum jewellery demand suffered less than gold in mainland China, falling 13% in 2020, as retailers rotated stock to platinum on a sharp gold rally. In contrast, Japanese platinum jewellery demand declined by 20% in 2020, again hit by retail store closures, restricted opening hours and reduced demand for bridal jewellery as weddings were put on hold (Source: JM PGM Market Report May 2021).
2. Automotive – With the shutdown of a large part of the auto industry and its many suppliers all over the world, 2020 was an extremely difficult year for the auto industry – collected data shows a 16% decline in 2020 production to less than 78 million vehicles (source: OICA.net). Compared to American and European counterparts, Asia was more resilient, particularly mainland China, which recovered quickly from the initial wave of the pandemic, and saw only a 2% decline in production.
2020 sales figures showed a more than 20% decline in most major markets, except for mainland China (-2%) and South Korea (+6%) (OICA data). Platinum and palladium auto-catalyst fabrication suffered double-digit losses as a result. For platinum, diesel’s market share losses, especially in Europe was somewhat offset by higher PGM loadings in Asia under tightening emissions standards.
3. Petrochemical/Glassmaking – This was a mixed landscape. Petrochemicals saw reduced PGM demand due to oil refinery closures in Japan and Southeast Asia; COVID-19-related declines in capacity use; and slower refining capacity expansion in the region. Conversely, industrial PGM demand in mainland China remained resilient, with new plant construction proceeding on schedule under the 13th Five Year Plan (which aims to increase self-sufficiency in petrochemicals). The Chinese fiberglass industry also saw forward buying of platinum for future projects. SGE sales of platinum ingots more than doubled to 1.35 million oz, reflecting extremely strong underlying industrial demand (JM PGM Market Report May 2021).
4. Electronic equipment – Big changes in working and social behavior triggered by the pandemic saw increased demand for devices like laptops, computers, games consoles and other home entertainment systems. This in turn increased PGM demand in electronic plating applications and components, such as hard disk drives and chip resistors.
5. Investment demand had a strong year in 2020 – platinum ETF holdings rose by more than 2.1m oz in 2019-2020, and Japanese retail investors purchased physical bars totaling around 400,000 oz (source: JM PGM Market report May 2021). With gold and palladium trading at record high prices, platinum attracted more safe-haven investment.
Asia-Pacific is expected to be the fastest growing PGM market globally. Within this region, mainland China alone accounts for nearly 50% of the market. In mainland China, platinum demand in chemical and petroleum refining applications may continue to benefit from large integrated petrochemical infrastructure investment. The country is also the largest hard disk drive producer globally, creating additional strong demand for PGM.
Industrial demand should hopefully continue to recover in 2021, helped by vaccine rollouts, the reopening of economies, and improved consumer and investment sentiments, supported by further fiscal and monetary stimulus. Despite renewed pandemic outbreaks in some regions, industrial PGM demand is generally predicted to increase. Reopening of plants and related supply chains in the region is also helping to boost PGM demand in petrochemical and fiberglass industries.
Vehicle sales in 2021 are forecast to be significantly higher as economies recover. Mainland China’s auto sales ended 2020 with a 6.4% year-on-year increase in December (according to CAAM) and local market sales of 26 million vehicles are expected in 2021 (vs 16.96 million vehicles as of Q3 2020). This should be beneficial to palladium and rhodium.
Platinum also benefits from the introduction of China’s Stage VI emissions standard. Meeting these standards will require a complete overhaul of heavy duty diesel catalyst systems, likely trebling PGM loadings on Chinese diesel trucks this year. Similarly in India, the average PGM content of a gasoline car rose by 6% in 2020, following implementation of the Bharat VI legislation. South Korea and mainland China present new growth markets for the fuel cell vehicle industry, which will also drive new PGM demand. With palladium climbing above US$3,000 and rhodium above US$30,000 in the early part of the year, platinum also benefited from some substitution of palladium in gasoline autocatalysts in a number of major markets. Still, both palladium and rhodium demand will likely see double digit growth in demand from the auto industry in 2021, as vehicle output increases and major markets phase in tighter emission regulations.
A gradual recovery of consumer spending and reopening of retail stories should lift jewelry demand, but arguably not to pre-pandemic levels. Barring renewed country-specific outbreaks, all regions are predicted to see growth in demand amid improved economic prospects. Demand in China is estimated to recover though still well below 2019 levels. We also see some change in consumption patterns. With many consumers around the world continuing to see restrictions on social movements and international travel, spending may – in contrast to the start of the pandemic – start being diverted to consumer goods, including jewelry. This could especially be the case in Hong Kong, mainland China and India. Customers have also become more confident about buying jewelry online. Higher platinum prices and a narrower discount on gold could counter that rise in demand however, especially in Asian markets, which are generally more price-sensitive versus the US and Europe.
With the platinum price moving to a six year high of just over US$1,300 in mid-February, investment demand started to contract. Japanese investors started profit-taking when the retail price soared to nearly 5,000 JPY/gram (doubling in less than a year) and ETF buying becoming subdued (Source: JM PGM Market Report May 2021). The platinum market is forecast to move back into surplus in 2021 despite a 27% gain in autocatalyst demand, according to estimates published in JM’s latest PGM Market report.
Despite all the disruption to PGM demand and supply, there are clearly opportunities in the post-pandemic world. Asia will surely be a key growth region, as economies re-open, pent-up demand is released, central banks continue stimulus measures and massive infrastructure projects get further underway in China. Add to this both a greater reliance on home technology as working and social habits change; and the rapid development of low carbon economy technology, increasing demand of PGM from hydrogen powered Fuel Cell Electric vehicles; and we can expect an interesting and exciting future for the PGM market.
This is a desk view and represents the best estimates or approximation as at the time of compilation and not a recommendation. Investors must make their own determination and investment decisions.
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Please don’t hesitate to send us your comments/ suggestions/ ideas – you can email us at firstname.lastname@example.org or send us a message through the website on www.wipgms.com or our various social media sites, handles below.
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Stay safe and strong until next time…
The WiPGMs Board