Platinum Group Metals Yearbook 2018cpmgroup.com/files/Presentations/2018/CPM PGM Yearbook...1976...

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Platinum Group Metals Yearbook 2018 Jeffrey M. Christian Rohit Savant 10 July 2018

Transcript of Platinum Group Metals Yearbook 2018cpmgroup.com/files/Presentations/2018/CPM PGM Yearbook...1976...

Platinum Group Metals Yearbook 2018

Jeffrey M. Christian

Rohit Savant

10 July 2018

Special Thank You to This Year’s Sponsors

2

Sponsors

CME Group Commodities Now

Group Ten Metals Kitco Metals Inc.

Monex Precious Metals New Age Metals

NOAH Capital Markets Platinum Group Metals Ltd.

Umicore

Sabin Metal Group of Companies

The Institute of Scrap Recycling Industries, Inc.

Chinese Partners

China Gold Association

China National Gold Group Corporation

Jingyi Gold Co Ltd.

Economy

3

-6

-4

-2

0

2

4

6

8

10

-6

-4

-2

0

2

4

6

8

10

1980 1985 1990 1995 2000 2005 2010 2015 2020p 2025p

World

Emerging and Developing Economies

Advanced Economies

Real Gross Domestic Product

Annual, Projected Through 2026

Percent Change Percent Change

Actual Projected

Global Economic Growth

4

Average Global Economic Growth

Source: CPM Gold Long-Term Outlook

1980-2000 2000-2007 2010-2016 % Chg. 2017-2026

World 3.3% 4.5% 3.7% -17.8% 3.3%

Themes

5

Platinum Prices

6

750

850

950

1050

1150

1250

1350

1450

1550

1650

1750

1850

1950

10 11 12 13 14 15 16 17 18

$ / Oz

Platinum Prices: 1 January 2010 to 5 July 2018

Platinum Market Remains In A Surplus

7

-1,600

-1,400

-1,200

-1,000

-800

-600

-400

-200

0

200

400

600

800

1,000

1,200

1,400

1,600

-1,600

-1,400

-1,200

-1,000

-800

-600

-400

-200

0

200

400

600

800

1,000

1,200

1,400

1,600

76 78 80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 10 12 14 16 18p

Platinum Surplus/Deficit

Annual, Projected Through 2018

Thousand Ounces Thousand Ounces

Deficit/Net Reduction in Inventories

Surplus/ Net Additions to Inventories

Platinum Cumulative Surpluses Recover

8

0

2

4

6

8

10

12

14

16

76 78 80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 10 12 14 16

Government of Russia Estimated Investor Holdings

Estimated Industry Inventories Reported ETF Holdings

Reported Exchange Inventories Cummulative Surplus

Cumulative Platinum Surplus And Its Disposition

Mil. Oz.

Palladium Prices

9

350

400

450

500

550

600

650

700

750

800

850

900

950

1000

1050

1100

1150

Jan-10 Jan-12 Jan-14 Jan-16 Jan-18

$ / Oz

Palladium Prices: 1 January 2010 to 5 July 2018

Palladium Tight Market Conditions

-2,000

-1,500

-1,000

-500

0

500

1,000

1,500

2,000

2,500

3,000

3,500

-2,000

-1,500

-1,000

-500

0

500

1,000

1,500

2,000

2,500

3,000

3,500

76 79 82 85 88 91 94 97 00 03 06 09 12 15 18p

Thousand Ounces Thousand Ounces

Deficit/Net Reduction in Inventories

Surplus/Net Additions to Inventories

Annual, Projected Through 2018

Palladium Surplus/Deficit

Palladium Investors Increase Their Holdings

11

0

5

10

15

20

25

30

76 78 80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 10 12 14 16

Government of Russia Estimated Investor Holdings Estimated Industry Inventories

Reported ETF Holdings Reported Exchange Inventories

Cumulative Palladium Surplus And Its Disposition

Mil. Oz.

Rhodium Prices

12

0

2,200

4,400

6,600

8,800

11,000

S-94 S-97 S-00 S-03 S-06 S-09 S-12 S-15

Daily JM Rhodium Prices

Through 5 July 2018

$/Ounce

Rhodium Surplus/Deficit

-200

-150

-100

-50

0

50

100

150

200

-200

-150

-100

-50

0

50

100

150

200

1976 1980 1984 1988 1992 1996 2000 2004 2008 2012 2016

Rhodium Surplus/Deficit

Annual, Projected Through 2018

Thousand Ounces

Thousand Ounces

Surplus/ Net Additions to Inventories

Deficit/ Net Reduction in Inventories

Thousand Ounces

Platinum

14

Platinum Supply Needs To Decline Further

0

1

2

3

4

5

6

7

8

9

0

1

2

3

4

5

6

7

8

9

76 78 80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 10 12 14 16 18p

Million Ounces Million Ounces

Annual Platinum Supply

Projected Through 2018

South African Mine Production

Other Mine Production

Secondary Supply

Russian Supply

Platinum Secondary Supply Plateaus At Lower Levels

16

0

200

400

600

800

1,000

1,200

1,400

1,600

1977 1981 1985 1989 1993 1997 2001 2005 2009 2013 2017

China

Europe

Japan

United States

Platinum Available for Recovery from Spent Auto Catalysts

Annual, Projected Through 2018

Thousand Troy Ounces

Fabrication Demand Has Been Flat For Over Seven Years

17

0

1

2

3

4

5

6

7

8

9

0

1

2

3

4

5

6

7

8

9

76 78 80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 10 12 14 16 18p

Other Countries

Other Uses

Dental

Petrochemical

Electronics

Million OuncesMillion Ounces

Jewelry

Automotive

Annual Platinum Fabrication Demand

Through 2018

Declining Market Share For Diesel Passenger Vehicles

0%

10%

20%

30%

40%

50%

60%

1990 1993 1996 1999 2002 2005 2008 2011 2014 2017

Western Europe India

United States Japan

China

Diesel's Market Share of Major Passenger Car Markets

Annual, through 2017

Note: Japanese data is diesels as a percent of cars in use. U.S. data is estimated for 1990 through 2001.

Sources: Historical data-JAMA, ACEA, CAAM,news articles. Projections & estimated data-CPM Group

Strength In Commercial Vehicles Is Offsetting Weakness In

Passenger Vehicle Demand

0

500

1,000

1,500

2,000

2,500

J F M A M J J A S O N D

2013 2014 2015 2016 2017 2018

Monthly Commercial Vehicle Sales

Thous Units

Notes: Countries/regions included in this data series are China, US, Europe, Japan, India, and Brazil. These countries/regions account for 75% of global annual sales.

Sources: national auto associations, OICA, Bloomberg

Alternate Auto Technologies Are Not Expected To Be

Positive or Negative For Platinum In The Short Term

Fuel Cells

Fuel cells have been commercialized

In theory, this is positive for platinum fabrication demand

However, the greatest research efforts in this technology are being made toward

reducing the amount of platinum used

Electric Vehicles

Are Not Expected To Have Any Meaningful Impact on PGM Demand for at least

another 10-15 years at the least.

Platinum Jewelry Demand Fails To Rise

0

500

1,000

1,500

2,000

2,500

3,000

0

500

1,000

1,500

2,000

2,500

3,000

1976 1981 1986 1991 1996 2001 2006 2011 2016

Thousand Ounces

Annual Data, Projected Through 2018

Thousand Ounces

Platinum Jewelry Demand

Investors Net Sellers Of Platinum ETPs YTD

22

-400,000

-200,000

0

200,000

400,000

600,000

800,000

1,000,000

-400,000

-200,000

0

200,000

400,000

600,000

800,000

1,000,000

Annual Changes to Platinum ETP Holdings

Annual, Through June 2018

Troy Ounces Troy Ounces

0.0

0.5

1.0

1.5

2.0

2.5

3.0

0.0

0.5

1.0

1.5

2.0

2.5

3.0

07 08 09 10 11 12 13 14 15 16 17 18

PHPT LSE

ZKB

Platinum PPLT NYSE

NewPlat JSE

Platinum Exchange Traded Product Holdings

Daily, Through June 2018

Moz Moz

Platinum Non-Commercials Turn Net Short

23

-2,500

-1,600

-700

200

1,100

2,000

2,900

3,800

-2,500

-1,600

-700

200

1,100

2,000

2,900

3,800

95 97 99 01 03 05 07 09 11 13 15 17

Long

Short

Net Fund Position in Nymex

'000 Ozs

Non-Commercial Gross Long and Short Platinum Positions

Nymex Futures & Options. Weekly Data, Through

'000 Ozs

26 Jun. 2018

Palladium

24

Annual Palladium Supply To Rise At A Gradual Rate This Year

0

1

2

3

4

5

6

7

8

9

10

0

1

2

3

4

5

6

7

8

9

10

76 80 84 88 92 96 00 04 08 12 16

South African Mine Production

Russian Supply

Other Mine Production

Million OuncesMillion Ounces

Secondary Supply

Note: Russian supply is exports through 2002 and production since 2003.

Annual Palladium Supply

Projected Through 2018

Annual Palladium Fabrication Demand To Continue Rising This Year

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

8.0

9.0

10.0

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

8.0

9.0

10.0

76 79 82 85 88 91 94 97 00 03 06 09 12 15 18p

Electrical Auto

Dental Jewelry

Petro Chemical Other Uses

Million OuncesMillion Ounces

Annual Palladium Fabrication Demand

Projected Through 2018

Strong Vehicle Sales

27

-

5

10

15

20

25

1992 1997 2002 2007 2012 2017

Million Units

U.S. Auto Sales

-

5,000

10,000

15,000

20,000

25,000

30,000

05 06 07 08 09 10 11 12 13 14 15 16 17 18

Annual Vehicle Sales in China

Thousand Vehicles

US Sales Continue To Grow Larger

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2002 2005 2008 2011 2014 2017

Passenger Cars Light Trucks

Ratio of US Cars to Light Truck Sales

Global Semiconductor Sales Up Strongly

10

15

20

25

30

35

40

45

10

15

20

25

30

35

40

45

06 07 08 09 10 11 12 13 14 15 16 17 18

Source: Semiconductor Industry Association,via Bloomberg.

Monthly Global Semiconductor Sales

Data through May 2018

Billion USD Billion USD

Investors Net Sellers Of Palladium ETPs YTD

30

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

07 08 09 10 11 12 13 14 15 16 17 18

ABSAStandard BankSPPP NYSE (Sprott)MitsubishiSPALSPDMWITEGLTR

PHPD

ZKB

PALL

NYSE

Palladium ETP Holdings

Monthly Data, Through June 2018

Mln OzMln Oz

Source: ETP issuer website, Bloomberg

-800

-600

-400

-200

0

200

400

600

800

1,000

1,200

2007 2009 2011 2013 2015 2017

Thousand Ounces

Annual Changes to Palladium ETP Holdings

Through June 2018

Source: Bloomberg, ETP issuer website . Note: Yellow bar represents year-to-date

change in ETP holdings excluding two South African palladium ETPs.

Rhodium

31

Rhodium Supply Expected to Decline Slightly

0

200

400

600

800

1,000

1,200

0

200

400

600

800

1,000

1,200

1977 1985 1993 1997 2001 2005 2009 2013 2017

Thousand Ounces Thousand Ounces

Mine Production

Secondary Supply

Annual Rhodium Supply

Projected Through 2018

Rhodium Fabrication Demand: Rising

0

200

400

600

800

1000

1200

0

200

400

600

800

1000

1200

76 79 82 85 88 91 94 97 00 03 06 09 12 15 18p

Automotive Electronics

Chemical Glass

Other Other Countries

Thousand Ounces Thousand Ounces

Rhodium Fabrication DemandAnnual Data, Projected Through 2018

ETF Investors Have Been Selling

0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

May-11 May-12 May-13 May-14 May-15 May-16 May-17 May-18

Rhodium Exchange Traded Product Holdings

Daily, Through June 2018

Ounces Ounces

Note: Metal is stored in the United Kingdom and is the combined holdings of the ETC's two primary listings, the db Physical Rhodium ETC (EUR) traded on the Xetra and Borse Italiano and the db Physical

Rhodium ETC traded on the LSE.

Source: db, Bloomberg

Minor PGMs

35

Ruthenium

0

100

200

300

400

500

600

700

800

900

0

100

200

300

400

500

600

700

800

900

72 74 76 78 80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 10 12 14 16 18

$/Ounce$/Ounce

$

Metals Week New York Dealer Prices, Through 17 May 2018

The Price of Ruthenium

Iridium

0

200

400

600

800

1000

1200

0

200

400

600

800

1000

1200

72 74 76 78 80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 10 12 14 16 18

$/Ounce$/Ounce

Metals Week New York Dealer Prices, Through 17 May 2018The Price of Iridium

Osmium

0

100

200

300

400

500

600

700

800

900

1,000

0

100

200

300

400

500

600

700

800

900

1,000

72 74 76 78 80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 10 12 14 16 18

The Price of Osmium

Metals Week New York Dealer Prices, Through 17 May 2018

$/Ounce$/Ounce