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BMO: Chinese car sales could boost PGM prices

South Africa's Increase in Recycled Platinum Boosts Global Supply ...The combination of another supply disruption in South Africa and improving Chinese auto sales bode well for prices of platinum group metals, said BMO Capital Markets.

Analysts cited Wednesday news that Anglo American Platinum has shut down its Phase B unit of the Anglo Converter Plant for the second time this year due to equipment issues. This could mean “a further near-term rally” in PGM prices, considering Chinese auto demand is improving again after COVID-19 lockdowns interfered with sales earlier in the year, BMO said.

PGMs are used in autocatalysts. Amplats did not offer guidance on the impact of the closure, saying it would provide more details as it has more information. However, BMO estimated that should the outage last a month, this could remove around 150,000 ounces of platinum and 100,000 ounces of palladium from the market.

“In particular, the latter [palladium] remains a market with low available inventory, such that any prolonged outage could see prices retest the previous record seen earlier this year,” BMO said.

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