Page 15 - Bollion World Volume 4 Issue 8 August 2024

Bullion World | Volume 4 | Issue 8 | August 2024

“Our exchange fills a gap in the Chinese market, Part of SPW 2024 involved site visits to several firms
providing the mechanisms to discover the domestic in the hydrogen value chain which have shown strong
prices of platinum and palladium in China and help growth. Looking ahead, growing economies of scale will
businesses hedge price risk, opening up working result in cost efficiencies that will drive future scaling.
with the two metals to a greater number of market
participants throughout the metal value chains. The Investment demand for platinum in China is
ability to hedge price risk will provide a welcome boost strong and on a growth trajectory. Representatives
to the ongoing development of China’s PGMs market from various companies highlighted the successes in
which is essential to the country’s energy transition developing platinum as an investment product, driven by
and ongoing decarbonisation efforts. The availability platinum’s wide price discount to gold and high-quality
of domestic futures could potentially boost consumer products. Indeed, WPIC’s product partners in China
confidence in both metals, increase the availability of delivered almost 200 koz of investment product sales
recycled metal and further accelerate demand growth.” in 2023, up from almost nothing in 2018, with strong
momentum continuing in 2024.
WPIC believes that developments such as GFEX’s plans
to launch PGM derivatives in China are a key component Headwinds to both primary and secondary platinum
of a broader and necessary market restructuring, supply were also discussed at SPW 2024. The key
which should include harmonising the VAT paid on challenge faced by PGM miners is the weak basket price,
platinum purchases with that of gold. Updating the VAT which is pushing them to cut costs to minimise losses
regulations combined with the ability to manage price but will likely increase the risk of lower mine supply over
risks would improve the competitiveness of Chinese the medium-to-longer-term. In terms of recycling supply
domestic corporations, and maximise the accumulation from China, tax experts discussed China’s new reverse
of platinum and palladium – both strategically important invoicing policy which aims to generate tax from an
metals – within China as a domestic reserve. historically cash-based transaction between upstream
scrap collectors and recycling enterprises. Industry
The strategic importance of PGMs takes on participants cited the revocation of the 3% VAT rebate
further significance as China looks set to lead the as onerous on a sector typically operating at low margins
global hydrogen economy push, with a March 2024 and suggested it will result in downward pressure to
government report calling to expedite the technology. recycling PGM supply.

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