The World Platinum Investment Council WPIC predicted a large surplus in the platinum market this year, as automakers are accelerating efforts to use less palladium and more platinum due to concerns over palladium supply from Russia.
Russia is responsible for around 25 - 30% of the world's supply of palladium and around 8 - 10% of its platinum.
There is no indication that Russian exports have been curtailed by sanctions on the country since it sent troops into Ukraine in February but with the war dragging on more companies may boycott Russian metal and governments could impose restrictions on the country.
Trevor Raymond, head of research at the WPIC's head of research, said the substitution effort has gone up hugely. The amount of savings an automaker can make is huge. Concerns about availability of palladium at around $950 an ounce, platinum costs about half as much as palladium. Automakers use between 2.5 and 3 million ounces of platinum a year and around 8.5 million ounces of palladium.
The WPIC said the roughly 8 million ounces a year platinum market would be oversupplied by 627,000 ounces this year, after a surplus of 1.13 million ounces in 2021.
It forecast a surplus of 652,000 ounces for 2022 in March.
For the full year, supply would be 5% less than in 2021 and demand would be 2% higher, with auto industry demand rising 16% due to an increase in light duty vehicle production, higher loadings per vehicle to meet tighter emissions regulation and substitution from palladium.