Zimbabwe platinum production was up 4.3% in the third quarter of 2020, to 121 koz (thousand ounces) year on year from 116 koz in the same quarter in 2019. This increase was driven by a huge relaxation of the Covid-19 lockdown by the government. The country also did ramp up production by 3.4% quarter on quarter from 117 koz produced in the second quarter of 2020.
Zimbabwe has three platinum producing mines; Zimplats, Unki Mine and Mimosa while it holds the world’s second largest platinum reserves after South Africa.
In terms of yearly platinum production, the WIPC forecasts that Zimbabwe will see its 2020 FY production rise by 4% to 472 koz from 455 koz in 2019. However the 2021 forecast is gloomy with the world body seeing platinum production in Zimbabwe fall by 2% to 463 koz.
Overall, Q3’20 saw large sections of the world market, both supply and demand, returning to near-pre-COVID-19 operational levels as global economic conditions improved compared to the first half of 2020.
Besides COVID-19 workplace requirements in plants impacting capacity across the globe, increased vehicle demand by 70% in Q3 quarter on quarter and incentives in Europe and elsewhere, drove growth in global automotive production levels. Consequently, automotive demand for platinum in Q3’20 was just 3% below Q3’19. The early adoption by some cities and provinces of China VI legislation for light duty vehicles and the ramp-up of heavy-duty vehicles’ compliance requirements to China VI saw China platinum auto demand growth of 68% (+30 koz) year-on-year in Q3’20.
Despite the strong quarter-on-quarter recovery in mine and recycle supply, the stellar rebound in automotive demand and sustained strong investment demand for precious metals, including platinum, lifted Q3’20 platinum demand well above supply, leaving the quarter in a deficit of -709 koz. The deficit in 2020 is now expected to be just over 1.2 million ounces, with the outlook for 2021 a forecast deficit of -224 koz.
Platinum supply during the third quarter of 2020 fell 5% year on year, which was modest as the Q2 2020 year on year supply was down a sizeable 36% compared to Q2 2019. As operations ramped up in the quarter, total mine supply grew to around 4% which is 66 koz lower than the Q3 2019 levels. Overall, 2020 forecast sees a 21% fall (-1,300 koz) year-on-year with c.-400 koz due to COVID-19-related mine shutdowns and c.-900 koz due to the impact of the converter plant outage in the first half, compounded by the recent announcement of a similar outage in the last two months of 2020. The latest outage will alone reduce supply by c.-350 koz this year.
Investment demand increased considerably in Q3’20, up year-on-year by 291% (+730 koz), with significant year-on-year rises in ETF demand (increase of +336 koz) and bar and coin demand (increase of +42 koz). This was aided by the increase in stocks held by exchanges (primarily NYMEX approved warehouse stocks) which rose by +351 koz year-on-year as market making banks continue to increase these stock levels. Investment demand is expected to grow by 32% (+406 koz) in 2020, as precious metals including platinum remain an attractive alternative investment, supported by platinum’s deep discount to gold. A healthy 123% increase in bar and coin investment is forecast for 2020, and demand will continue to remain high by historical standards going into 2021.
Global platinum jewellery demand in Q3’20 bounced back by 27% quarter-on-quarter as pandemic-related restrictions eased, with a 14% (+29 koz) increase in China. Looking to 2021, global jewellery demand is forecast to gain 13% (+246 koz), with all regions seeing double-digit growth.