Platinum will register a 2.2% bigger supply deficit than previously expected for 2023 at a record 1 million troy ounces, driven by strong demand and flat supply, the World Platinum Investment Council (WPIC) said on Wednesday. Demand for platinum, which is used in catalytic converters to reduce harmful emissions from vehicle exhaust systems among other applications from jewellery to glassmaking, is on track to grow 27% to 8.2 million troy ounces in 2023, the WPIC said in a quarterly report.

Rising vehicle production, with use of more metal per vehicle and substitution by automakers of palladium for cheaper platinum , is helping to drive demand. Supply, meanwhile, is expected to remain at last year's 7.2 million ounces, partly owing to ongoing electricity shortages in major producer South Africa. That will leave the market undersupplied by 1 million troy ounces this year, said the WPIC, which three months earlier predicted a deficit of 983,000 ounces. The WPIC expects automotive and industrial consumption to underpin total demand growth for platinum in 2024 and availability of above-ground stocks to decline.

"By the end of 2023, above-ground stocks will represent only five months of annual demand, with most of these stocks held in China and not readily able to be exported to meet global shortfalls, increasing concerns over metal availability," it said.

In the second quarter, the platinum market was undersupplied by 348,000 ounces to chalk up consecutive quarters of deficit for the first time since the second half of 2020. PLATINUM SUPPLY/DEMAND ('000 oz)* 2022 2023 23/22 Q2 Q1 Q2 forecast forecast 2022 2023 2023 % change SUPPLY Refined 5,522 5,575 1% 1,530 1,177 1,464 Production: - South Africa 3,915 3,919 0% 1,129 763 1,028 - Zimbabwe 480 502 5% 124 116 126 - North America 263 281 7% 64 71 74 - Russia 663 667 1% 161 180 190 - Other 201 205 2% 52 48 47 Change in producer +43 +30 -2 +24 +14 inventory Total Mining 5,565 5,605 1% 1,528 1,201 1,478 Supply Recycling: 1,691 1,620 -4% 391 374 345 - Autocatalyst 1,250 1,180 -6% 281 262 244 - Jewellery 372 370 0% 92 95 84 - Industrial 68 69 2% 17 17 17 Total Supply 7,256 7,224 0% 1,918 1,575 1,823 DEMAND Automotive 2,902 3,283 13% 703 850 840 Jewellery 1,899 1,893 0% 489 462 480 Industrial: 2,331 2,667 14% 621 622 697 - Chemical 676 758 12% 126 251 235 - Petroleum 193 171 -11% 48 42 42 - Electrical 106 97 -8% 27 23 24 - Glass 505 756 50% 202 89 170 - Medical 278 287 3% 69 71 71 - Other 573 598 4% 149 147 154 Investment: -640 386 N/A -162 169 154 - Change in bars, 225 326 45% 72 100 26 coins - Change in ETF -558 60 N/A -112 40 155 holdings - Change in stocks -307 0 N/A -123 29 -27 held by exchanges Total Demand 6,491 8,230 27% 1,652 2,103 2,171 Balance 764 -1,005 267 -528 -348 Above-ground 4,608 3,603 -22% Stocks Source: World Platinum Investment Council, Platinum Quarterly Q2 2023 (Reporting by Polina Devitt Editing by David Goodman)