A surge in sales of hybrid cars as electric vehicle take-up slows is set to provide an unexpected boost to demand for platinum group metals (PGMs) in the coming years, similar to the extended lifespan now predicted for coal.
PGMs – principally platinum and palladium – face a long-term structural decline in demand as their main use has been to clean auto exhausts, a process that is not needed in pure EVs.
A few years ago, the prospects for PGMs, and producers such as Anglo Platinum, Impala Platinum and Sibanye Stillwater, appeared grim as EV sales soared, and the drop-off in demand was expected to be steep.
But a tapering in growth of EV sales, and a surge in demand for hybrid cars that need catalytic converters to curb pollution, have given PGMs a new lease of life that could put a floor under prices and keep some mines open for longer.
“You’re still facing an outright demand decline, but there’s not an immediate collapse, which could have been the projection in some (previous) scenarios,” said Marcus Garvey, head of commodities strategy at Macquarie Bank in Singapore.
The increase in sales of pure EVs globally in the first half of 2024 slowed to 11 per cent year-on-year, while plug-in hybrid (PHEV) sales jumped 44 per cent, according to consultancy Rho Motion.
For EVs, the figures are a big fall-off from two years ago when sales rocketed 77 per cent.
Popular PHEVs include BYD’s Song and the BMW 3 Series.
Garvey said the PGM situation had some parallels to coal, which is being phased out as governments slash carbon emissions, but will still be needed for years until more renewable energy is rolled out.
Weak PGM prices are currently curbing investment in production and if miners decide to shut operations due to low profitability, prices could become volatile.
“The scope for the market to get tighter than currently projected seems very, very high if we start to see some producer response,” Garvey said.
Hybrid strength
The rise of hybrids could last until 2030 or longer, extending the period when PGMs are needed, analysts said.
“The shift to hybridisation could be quite meaningful for the longer-term sustainability of the PGM industry,” said Wilma Swarts, director of PGMs at consultancy Metals Focus.
The weakness in EV sales means that combined sales of petrol and hybrid cars, which was expected to be flat last year, climbed by nine per cent, according to catalyst maker and PGM specialist Johnson Matthey.
“This alone added 600,000 ounces to our automotive PGM demand estimates,” it said in a report, adding that total auto PGM demand rose eight per cent last year to 13.1 million ounces, the second highest total ever.
(Story has been picked from a syndicate wire feed and remains unedited by Times Now)
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