Why is there a 'Platinum Shortage' Again This Year?..."Electric Cars Decline, Hybrid Cars Rise"

The shortage of platinum, mainly used in internal combustion engine vehicles, is expected to continue this year due to the slowdown in electric vehicle demand.

According to the "2024 Platinum Supply and Demand Outlook" report published on the 13th (local time) by the World Platinum Investment Council (WPIC), a total platinum supply shortage of 476,000 ounces is predicted for this year. This marks the second consecutive year of platinum supply shortages following last year.

Platinum, one of the world's three major precious metals, is also highly valued as an industrial material. It is notably used as a catalyst to reduce emissions in internal combustion engine vehicles in the automotive industry.

After the spread of electric vehicles following COVID-19, the prevailing view was that platinum demand would naturally decrease, but the prediction was off as hybrid vehicles, which are transitional, began to gain attention. Since hybrid vehicles also have internal combustion engines, platinum use is necessary.

Additionally, the recent trend in the automotive industry to replace palladium with platinum has further fueled the supply shortage. The tightening of emission regulations led by major countries such as the United States has also had an impact.

On the other hand, the mining industry in South Africa, the world's largest platinum-producing region, has not been able to increase supply due to deteriorating profitability over the past few years.

Platinum prices have been rising again since last month. According to the New York Mercantile Exchange, platinum futures prices rose more than 10%, from $913 per ounce on the 24th of last month to $1,011 per ounce recently.

WPIC forecasts that platinum demand will steadily increase going forward.

Edward Stock, WPIC's head of research, said, "Not all drivers will be driving Teslas by 2030," adding, "This means there will be more internal combustion engine vehicles and hybrid vehicles. Platinum is still significantly undervalued."