PGM Market Outlook Amid Global Uncertainty

The Platinum Group Metals (PGM) market is facing a complex landscape shaped by various global factors, including geopolitical uncertainty, economic pressures, and evolving vehicle technologies. While some factors are stabilizing, significant challenges remain, particularly in China and Western Europe. The threat of China’s growing debt and the strain on Europe’s energy systems, coupled with high interest rates, continue to impact the global economy and PGM demand.

Economic Pressures and Interest Rates

High interest rates, as reported by the Federal Reserve Bank of New York and the OECD, are driving up costs for PGM-related industries, particularly affecting car sales. Central banks may induce rate cuts to ease the pressure, but the current environment is constraining vehicle sales, especially for traditional internal combustion engine (ICE) vehicles.

Green Transition and Vehicle Trends

The global push toward cleaner energy is reshaping the automotive market. The rise of the green economy, supported by battery and hybrid vehicle technologies, presents both opportunities and threats for PGMs. Battery Electric Vehicles (BEVs), which don't require catalytic converters that use PGMs, are growing, but their growth is stalling due to the reduction of subsidies. Hybrid vehicles, which combine petrol engines with batteries, are emerging as a strong contender for the future, particularly for long-distance travel.

While BEVs eliminate the need for PGMs, hybrid vehicles, which still use petrol or diesel, continue to rely on autocatalysts containing PGMs like palladium (Pd) and rhodium (Rh) to reduce emissions. As countries push for cleaner cars, the demand for these metals remains high. With petrol vehicles expected to dominate until at least 2028, and the potential for synthetic fuels, PGMs will remain critical.

China's Role and Global Competition

Chinese automakers are aggressively pushing EVs, leveraging their cost advantages and domestic resources. This is putting pressure on Western car manufacturers, who struggle to compete in the EV battery market. The impact on PGM prices will largely depend on how successfully Chinese automakers capture global market share. There is concern in the West that barriers to Chinese dumping practices may help stabilize prices, but competition remains fierce.

PGM Supply and Production Challenges

The PGM sector faces additional challenges with labour costs and electricity prices rising, accounting for more than 40% of production costs in some regions. Investment in new PGM supply is slowing, and ore grades are declining, especially in Russia and the U.S., leading to potential supply constraints. South Africa’s mining sector, through expansions like Ivanplats and Wesizwe, is expected to take a larger role in PGM supply as Russian production declines.

Conclusion

As vehicle technology transitions toward hybrids and synthetic fuels, demand for PGMs, particularly palladium and rhodium, will remain strong, especially in catalytic converters for ICE and hybrid vehicles. However, the ongoing shift to electric vehicles, geopolitical uncertainty, and economic pressures will continue to challenge the PGM market, with a potential supply deficit looming in 2024. The industry’s ability to adapt to these changes, particularly through investments in green hydrogen production and mining expansions, will be critical in shaping the future of PGMs.