Page 26 - Bullion world volume 4 issue 6 june 2024

Bullion World | Volume 4 | Issue 6 | June 2024

So what are the implications for the PGM? BYD is expected to be exporting a lower-cost high range
The auto sector typically accounts for 45% of platinum vehicle into Europe within the next year or so.
demand and over 80% each for palladium and rhodium. This PHEV momentum offers some interim relief to
As we make the transition from gasoline and diesel to palladium and rhodium as these vehicles still need the
alternative energy sources, palladium and rhodium, as exhaust after-treatment.
things stand, will suffer a lot more than platinum. This
is not only because of the auto sector’s predominance There are already signs that the net zero deadlines may
in the demand profile for the former metals, but also be modified. The EU, for example, is scheduled to ban
because platinum will be a key player in the hydrogen the production of ICE vehicles as of 2035 and hefty
economy, both as the feedstock for the electrodes in fuel penalties are reported to be in line for companies that
cells but also as an essential element in PEM electrolysis fail to meet those targets. There is a review scheduled
to produce green hydrogen from water. Palladium and for 2026, however, and some kind of roll back may prove
rhodium do not currently have a role in either of these inevitable.
end-uses, although there is considerable research
underway to remedy this position. A formal projection for a demand balance in this sector
is therefore fraught with pitfalls (and even more so if
Consumer resistance is changing the picture Mr Trump regains the White House as the Inflation
All is not as grim as it might appear, however. A Reduction Act may come under the knife). The worst
combination of consumer resistance, pricing and case scenario is that by 2040, platinum demand in the
limping infrastructure (charging station distribution) auto sector on its own may have fallen by 62% on a
are threatening the pace of the transition with a key gross basis and be non-existent once scrap return is
concern the driving range of battery powered vehicles included. If PHEV maintains its current 30-odd percent
(BEV). The average driving range of an electric car is market share of electrified vehicles, then the usage
currently estimated at 300 miles on a single charge, would be roughly the sane as currently; and if the
although Toyota has said that between 2027 and 2028 aggressive fuel cell profile is added in then demand
the company will be using a pack offering over 600 miles’ could be up by over 30%.
range, and at a lower cost than currently.
Palladium and rhodium, with declining PHEV, would
Even so, there is growing consumer resistance to fall by more than 90% after scrap return, while if PHEV
BEVs and the rapid growth in BEV market share of the maintained market share, they would still fall by over 50%
past couple of years is stalling. Plug-in Hybrid Electric and over 75% respectively.
Vehicles (PHEV) are the main beneficiaries, as they
remove some of the “range anxiety” as well as being A dim outlook, therefore. No surprise that much
more competitively priced. That said, China auto giant research is underway.

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