LONDON, May 15 (Reuters) – A global deficit of platinum in 2023 will be 77% larger than previously expected due to supply constraints and higher demand, the World Platinum Investment Council (WPIC) said in a quarterly report on Monday.

Demand for platinum, used in vehicle exhausts, industry and jewellery, is expected to grow by 28% in 2023 to 8.2 million troy ounces, the WPIC said.
The use of more metal per vehicle, and substitution by auto makers of palladium for cheaper platinum, is driving the increase. Both metals neutralise harmful engine emissions.

Industrial demand is expected to rise to record levels, the WPIC said, thanks largely to an expansion in China of glassmaking facilities which require platinum.
Supply, meanwhile, is expected to fall by 1% to 7.2 million ounces, partly due to electricity shortages in major producer South Africa.

That will leave the market undersupplied by 983,000 ounces, said the WPIC, having only two months ago predicted a deficit of 556,000 troy ounces this year.

“The market will need to rely upon above-ground stocks to meet the shortfall, but…it is not clear how freely available they are likely to be at current prices, particularly as a sizeable portion of above-ground stocks appear to be held in China,” it said.
The platinum market was already undersupplied in the first three months of 2023 – the first quarterly deficit since the second quarter of 2021, the WPIC said.

Demand jumped by 28% in the first quarter as investors bought bars and coins as a safe store of value amid global economic uncertainty or as a speculative bet that deficits will push platinum prices higher.

(Reporting by Polina Devitt; editing by Kirsten Donovan)