Overall platinum supply is projected to fall by two per cent year-on-year to 7,330 kilo ounces (koz) in 2017, with both primary and secondary supply set to decline.
India's demand for platinum-based jewellery, on the other hand, is rising. According to the World Platinum Investment Council, the Indian jewellery sector's demand for the precious metal was the highest in 2016, having risen 11.5 per cent to 245 Koz. Paul Wilson, chief executive officer of WPIC, says this demand is expected to grow even faster in 2017.
Demand from the automotive sector, in which the strong white precious metal is used as an auto catalyst in converters to reduce carbon emission, has fallen in 2016 by 6 per cent to 165 Koz.
India's demand for the metal is around 5-6 per cent of the total global consumption, and most of it comes from the jewellery and automobile sectors, at 420 Koz in 2016. The metal is also used in laboratory instruments and has some other industrial applications as well. The council said in the report, "The full-year forecast for automotive platinum global demand is 3,405 koz (thousand ounce), down only very slightly from 3,435 koz in 2016. Despite the loss of diesel share in smaller cars in Western Europe and India, diesel is expected to retain much of the medium and larger car market, at least in the short to medium term." The use of platinum in diesel vehicles is higher than in those running on petrol.
About India's auto sector demand, the council said, "In India, there are signs that automakers are stopping production of the diesel versions of some of their smaller cars, as diesel loses ground to gasoline. However, with implementation of GST, this may boost consumer confidence and drive up sales, or the confusion may lead consumers to postpone purchases beyond 2017. These downside risks are likely to affect small cars more than larger ones, so the diesel impact is lessened".
As far as investment in platinum in India is concerned, the market is yet to develop, though it rose 66 per cent to 505 koz in 2016 in the global market. India may now see some traction because WPIC has tied up with Muthoot Exim, the precious metals division of the 130-year old Muthoot Pappachan Group, to launch India's first platinum deity products.
Wilson of WPIC says, "Today platinum investment is an underexploited market in India, but based on the recent history of growth in jewellery and opportunities, the platinum investment market in India has great potential."
