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Platinum's 2023 Auto Demand Hits 6-Year High

Substitution helps drive market supply deficit...
A PLATINUM DEFICIT between supply and demand of over one million ounces is now forecast for 2023, says the latest 60 Seconds from the World Platinum Investment Council.
Strong automotive demand growth is a key factor, in addition to industrial demand growing to record levels, and flat supply.
Platinum automotive demand is expected to reach 3,283,000 ounces in 2023 (3,283 koz), up 13% on 2022, the highest level since 2017. While that continues to be driven primarily by platinum-for-palladium substitution in autocatalysts to reduce harmful emissions from gasoline engines – forecast to reach 615 koz in 2023 – and higher loadings per vehicle, it has received a boost from higher-than-expected growth in vehicle production during the second quarter of 2023.
This is because the impact of the semiconductor shortage and other supply-chain challenges experienced by the automotive industry as a result of the pandemic and, more latterly, the Russian invasion of Ukraine, have eased considerably. 
During the second quarter, light-duty vehicle (LDV) production saw a healthy increase of 14% year-on-year, while heavy-duty vehicle (HDV) production improved by 18%. Despite challenging macroeconomic conditions and cost of living concerns, demand for new vehicles exceeded supply, which supported higher production rates. 
In North America, vehicle production improved by 15% year-on-year in quarter two. Platinum demand in the region improved due to a combination of a greater share of hybrid vehicles and higher platinum loadings – both the consequence of increased substitution of platinum for palladium and higher overall loadings to meet tighter emissions limits.
In Europe, platinum automotive demand increased by 11% on the back of strengthening LDV production which also increased 11% year-on-year. Even though Europe is one of the leading geographies for battery electric vehicle adoption, around 90% of the vehicles sold still contain platinum in their aftertreatment systems.
Range-extended electric vehicles (E-REVs), Fuel cell electric vehicles (FCEV), Hybrid electric vehicles (HEV), Mild hybrid (MHEV), Plug-in hybrid (PHEV), Electric vehicles (EV, also known as fully electric or battery electric). Source: World Platinum Investment Council
Automotive demand for platinum in China during the quarter surged by 60%. This was largely attributable to the implementation of China IV for non-road vehicles, as well as the HDV segment, where output recovered by 64%, while LDV production grew by 17%.
In addition, the full implementation of China's latest emissions regulations, which came into force on 1 July 2023, has had an impact. China VIb has seen China ban the production, import and sales of trucks and buses that fail to meet the new standard, despite some attempts to delay the implementation to 2024. A fourth factor that strengthened Chinese platinum demand was the increased substitution of platinum for palladium in exhaust treatment systems. 
Japan's LDV production of petrol and diesel cars increased by 20% compared to the same quarter in 2022, which was heavily impacted by semiconductor shortages. Meanwhile HDV production rose by a more moderate 6%. These higher production rates supported a 29% year-on-year increase in platinum automotive demand.
Elsewhere, auto production also improved by 11% year-on-year, resulting in a further lift in platinum demand.
Formed by the world's 6 leading platinum mining companies, the World Platinum Investment Council aims to stimulate investor demand for physical platinum through industry data, actionable insights, and the development of targeted new products and channels. In 2017 it partnered with BullionVault to make securely-stored platinum available at low cost with instant liquidity on the world's No.1 online market for private investors trading gold and silver.

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