The global market for platinum, a key ingredient in electrolysers, is heading for its biggest supply crunch for a decade as demand surges while production falls and recycling rates remain sluggish, according to the industry-backed World Platinum Investment Council (WPIC).

The WPIC has revised up its forecast of the size of the global supply deficit by 77pc, compared with its forecasts three months ago, on the back of a surge in demand from investors as well as “strong demand growth momentum” in the automotive and industrial sectors.

Total demand this year is expected to show stronger year-on-year growth than the previously forecast 28pc, while supply is expected to fall to 1pc below the already weak level recorded in 2022, the WPIC says. Supply has been hit by a range of factors including mining companies’ cost inflation and power supply problems in key producer country South Africa.

“Hydrogen-related platinum demand is expected to grow substantially in the medium term” Raymond, WPIC

Consultancy Rystad Energy said in February that prices for proton-exchange-membrane (PEM) electrolysers are likely to stay high in 2023 amid a tightening supply of platinum group metals. Platinum and iridium—used in catalyst-coated membranes and crucial for PEM electrolysers—have seen particular price volatility between January 2021 and the start of 2023. Volatility in key metals for PEM and alkaline electrolysers caused respective price rises of 30pc and 21pc between 2020 and 2022, Rystad says.

The electrolyser sector is gaining in importance as a platinum consumer as green hydrogen capacity expands, compounding pressure on global supplies of the metal.

“The link between platinum and the hydrogen economy is of increasing interest and is becoming more widely recognised by investors around the world,” says Trevor Raymond, CEO of the WPIC. “Hydrogen-related platinum demand is expected to grow substantially in the medium term; as hydrogen demand becomes meaningful, platinum could become a proxy for investors looking for exposure to the global decarbonisation journey.”

While hydrogen’s share is growing from a small base today, it is projected to become the major driver of platinum demand in the 2030s, the WPIC adds. Announced PEM electrolyser manufacturing capacity additions by 2030 total about 15GW, it says.

---

Author: Stuart Penson