The pgm markets were in deficit in 2019, due to a surge in platinum investment 
and record autocatalyst demand for palladium and rhodium. 


In 2020, pgm supply and demand will be severely impacted by the COVID-19 
pandemic, as national lockdowns hit auto production and South African mine 
supply.

Palladium and rhodium prices set new records in early 2020 as market liquidity 
tightened. 
The COVID-19 pandemic will hit pgm demand in 2020, with autocatalyst use 
expected to fall at least 15-20%. 
Pgm supplies could fall by over 20%, due to South African mine shutdowns and 
recycling network disruption.
Gross platinum demand rose by six per cent in 2019, pushing the market into 
deficit, according to estimates published in Johnson Matthey's latest Pgm 
Market Report. Investment demand surged to a record 1.13 million ounces last 
year, offsetting lower consumption in automotive, industrial and jewellery 
applications.

Automotive demand for palladium and rhodium soared to all-time highs during 
2019, as the phase in of strict China 6 legislation caused a step-change in pgm 
loadings on Chinese cars. As market liquidity worsened, both metals saw steep 
price gains which continued into early 2020. Palladium set a new record of more 
than $2,800 per ounce in February 2020, while rhodium surged to all time highs 
above $13,000.

Pgm prices fell steeply in March 2020, as the COVID-19 pandemic triggered sell 
offs in equity and commodity markets. Supply and demand for pgm are forecast to 
contract sharply this year, as lockdowns and other public health measures 
create significant challenges for the manufacturing, transportation and mining 
sectors.

A national lockdown in South Africa resulted in temporary shutdowns at many pgm 
mines and refineries from late March. Although South African mines were 
permitted to operate at 50% of normal levels from mid April, the introduction 
of physical distancing measures will have a lasting impact on mining volumes. 
There will also be a steep fall in secondary pgm supplies, due to severe 
disruption to recycling networks and a sharp decline in the number of vehicles 
being scrapped.

Alison Cowley, Principal Analyst at Johnson Matthey plc, commented: "The 
adoption of stringent infection-control measures will limit pgm mining volumes, 
especially at labour intensive mines in South Africa. However, to date Russian 
production has been relatively unaffected. This means that platinum and rhodium 
supplies are likely to be more heavily impacted than palladium. Meanwhile, the 
recycling network is grappling with business shutdowns, transportation 
difficulties and financial pressures. Some scrap collectors may be unable to 
fund the purchase of secondary materials, while processors are trying to reduce 
work in progress to generate cash. From mid 2020, we could see a steep drop in 
secondary pgm supplies."

Autocatalyst pgm demand will fall sharply in 2020, reflecting temporary 
closures at most major automotive plants and a contraction in consumer demand 
for new cars. Based on third party forecasts, light duty vehicle production is 
expected to fall by around 20% this year, while car companies may also seek to 
reduce the pgm content and cost of their emissions control systems. In China, 
new regulations may enable car companies to implement catalyst changes more 
quickly. This could allow some domestic automakers to thrift palladium and 
rhodium, and to accelerate platinum substitution programmes.

The impact of the COVID-19 crisis on industrial pgm demand in 2020 will vary 
significantly between sectors and regions. While end use segments such as 
textiles and automotive have been severely affected, others remain relatively 
buoyant. This is particularly true of chemicals used in the manufacture of 
personal protective equipment (PPE), drugs and disposable medical products. 
Chinese pgm demand will also be supported by the completion of capacity 
expansions under the government's current five year plan, and by lower pgm 
prices. In March, platinum purchasing by industrial consumers on the Shanghai 
Gold Exchange hit an all time high. 

Rupen Raithatha, Market Research Director at Johnson Matthey, commented: "A 
steep price decline in mid March triggered exceptionally strong demand for 
platinum ingot in China and Japan. Sales on the Shanghai Gold Exchange totalled 
around 340,000 oz in March, more than twice the previous monthly record. Most 
of this buying was by industrial customers, who took advantage of low prices to 
pre buy metal required for planned capacity expansions. Demand for platinum 
investment bars in Japan also set an all time monthly high, as the yen 
denominated retail price sank to a seventeen year low. This contributed to 
shortages of platinum ingot and led to a steep rise in platinum lease rates to 
around 10% in late March." 

Note to editors:

Johnson Matthey plc's PGM Market Report can be viewed and downloaded from the 
website 
(http://www.platinum.matthey.com/services/market-research/pgm-market-reports) 
and provides an overview of demand for platinum group metals in 2019 and an 
outlook for 2020. You can follow us on Twitter at @PMMJM. 

Johnson Matthey's Market Research Department has undertaken fundamental 
research into the Platinum Group Metals markets since the 1980s. Since 1985, 
Johnson Matthey has published supply and demand data twice yearly, in the 
Platinum and Interim Platinum series of reviews (1985-2013) and in the PGM 
Market Report (2014-2020). Previous reviews and reports can be downloaded from 
http://www.platinum.matthey.com/services/market-research/pgm-market-reports

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SOURCE: Johnson Matthey