Edward Sterck: Platinum Market Still Tight, Will Price Move in 2026?
Summary
Edward Sterck shares insights on the World Platinum Investment Council’s latest quarterly report, explaining that although Q1 …
Transcript
I'm Charlotte Mloud with investingnews.com and here today with me is Edward Sturk, director of research at the World Platinum Investment Council. Thank you so much for being here. Great to have you as always. >> Sean, thank you for the kind invitation. It's always great to chat. >> Great to have you back as always and it sounds like it's the perfect time to have you. We were talking just before we turned the camera on about how you just wrapped up London Platinum Week. So I wonder if you can start by sharing any key takeaways that we should be aware of. >> Yeah. No, absolutely. I'd be delighted to. So London Platinum Week, it's one of three kind of platinum weeks in inverted commas around the world. You've got uh London uh in May, Shanghai Platinum Week in July, and then New York platinum week in September. Um and it's really, you know, those those events are kind of opportunities for the whole of the industry globally to come together and um chat to each other and try and discover what's going on in the in the PGM space. And we're not just talking about platinum, but also palladium, roodium and um ruinium, meridium and osmium and so on. Um so I'd say in terms of the event itself um you know the the view last year as a contrast was um you know extremely bullish. uh prices began to move on the Tuesday of of platinum week and um you know have kind of doubled since then. Um where things stand today I I would say is uh kind of a little bit mixed. People are trying to still trying to work out what they've learned. Um you know we do see some potential headwinds to demand um from the automotive space related to the the conflict in the Middle East. Uh but on the other hand, we've discovered that there are some new end uses for for PGMs in things like um AI that we possibly hadn't really been aware of before. Uh not yet enough detail really to kind of accurately quantify what that demand pool looks like. Um but could be a good accelerant for platinum, for aridium and ethnium in particular. Um and you know I think if we think about the uh the broader picture from an investment perspective uh we saw strong investment demand for bars and coins in the first quarter of this year. Um we saw the precious metal rally obviously um lose momentum kind of in in in the sort of January time period but prices have remained actually pretty elevated and um you know pretty attractive levels. uh uh I think the you know the conflict in the Middle East has been uh pretty important in terms of um effectively driving inflation and so therefore expectations for higher interest rates around the world. Uh and as a result particularly talking about Federal Reserve rates in the US that lead leads to a a theoretical outlook for a stronger US dollar and therefore weaker US dollar commodity prices. That's kind of what took the wind out of the sales if you like for the precious metals rally. Uh that said, you know, I think there are some challenges associated with that uh that outlook. Uh inflation is exogenous. It's being driven by the conflict by high oil prices. Um and you know the US balance sheet is still extreme extremely stressed. You got debt to GDP at the the highest level ever. Um higher even than at the end of the Second World War. And you know, we've got about a 70 basis point shift in terms of Fed Reserve rate expectations to now from just before the conflict started. Every basis point equates to roughly about $3.3 billion of additional interest payments alone for the for the federal government in the US to make every year. So, you know, it's quite a it's just putting extra strain on the US balance sheet. And I think you know we could see a scenario where we see later this year that kind of motivation behind um you switch to to monetary type assets particularly precious metals and platinum that we saw come through in the in the fourth quarter of last year. You know that could return again in the second half of this year and be a big driving factor behind um you know sort of increased investment flows. >> Definitely a lot of factors at play moving the market right now and we'll get into those in a little bit greater depth. The World Platinum Investment Council's Q1 report just came out. So that plays into this too. And one point I wanted to start by pulling out there is that the market was in its first surplus in six quarters I believe. So I wonder you've talked a little bit about market dynamics. Can you share what led to that that surplus? >> Uh well there's a couple of things really. So um we've got uh well we had increased supply year in the first quarter of this year. Um in terms of mine supply, uh that was largely due to on a comparative basis compared to Q1 last year. Uh mine supply was was heavily impacted last year by flooding in South Africa. Uh and so you know on a relative basis we've seen a strong result this year because we haven't had a repetition of that. But you've also had um some other factors like uh deferrals of um planned maintenance which might which historically have always occurred in the first quarter to later in the year. So it's just kind of taking away a little bit of that seasonality. Q1 is normally very very weak from a wine supply perspective and then you tend to see progressively higher output as the year unfolds. Uh we've also got some growth in recycling supply. So that's principally price driven. Um effectively uh with higher prices uh things like lower grade spends water cats are more economic and so you can put more of them through your your your your smelters and uh and refineries recover more metal. That's a fairly temporary thing we think. Um but we are you know taking a conservative view and we assume that looking at the year as a whole we see recycling increase by around 9% year on year. So you know price growth as I said on the other side of the equation um demand's actually been um you know pretty good in fact in in most most um most segments but the exception really is in terms of investment demand. So there's two things that we capture within our investment demand flows that uh were negative in the quarter. Firstly with the kind of stalling of the precious metal rally we saw um some outflows from ETFs. Uh I think that partially that was profit taking but you know actually it was probably also a bit of a kind of liquidity call with anyone with any kind of energy exposure um needing you know I guess kind of call on cash to cover or or support margins for for their energy investments precious metals and this isn't just platinum it was kind of across the board was were used as a source of liquidity so those outflows obviously count as a negative demand factor in the quarter we also saw a little bit of an easing of the trade tensions in the uh exchange stocks linked to the CME um built up significantly last year to you know really elevated levels because you saw strong contango in the forward curve um due to fears around potential tariffs in the future um and so uh just with a bit of the an easing of the the kind of trade tensions and given that you've still got things like extremely elevated lease rates uh in the European market in the London market um if you could it made sense to take some of that metal out of the CME warehouses and put it back into the lease market. Now, I think the key thing is once we had that surplus in the first quarter and it was related to those ETF and exchange stock outflows, that was not enough to really kind of take the tension out of the market. So, if we look at those lease rates and you look at things like the the backidation in the London OTC forward market, uh we've still got elevated lease rates, we've still got backquidation. So even that release of almost half a million ounces of metal back into the market hasn't been enough to really satisfy uh the the market tension. You know, we've still seen those um above ground stocks that have been depleted over multiple years of of deficits just aren't being replenished effectively to to the level needed to to really um you know bring total liquidity back to the market and ease ease that tightness. >> Right. I see what you're saying there. And on the investment side, I thought it was it was pretty interesting to see the divergence there between bar and coin and ETF demand. I wonder if there's anything more you could say there in terms of what we were seeing geographically, regionally. Any any takeaways that we should note there? >> Yeah, so foreign coin demand obviously is uh you know kind of more retailled. Um we started the year with a lot of enthusiasm for precious metals really continuing um you know that Q4 uh sort of excitement last year. Um and so that translates into really strong bar and coin demand. China was a big driver of that but we also saw strength in other markets as well. That's that that that demand was particularly robust in January. It it did taper off as we went through the rest of the first quarter. Um you know I think the kind of end of the people people were kind of investing to a degree on the trend in precious metals. um as as the steam came out of that rally, a little bit more conservatism, people thinking about where is value here. As price came back a bit, we have seen um you some some return to bar and coin demand uh growth uh as you can probably imagine. But in terms of ETFs, uh like I said, you know, typically it's a bit more institutional in terms of the the kind of holder profile. Uh and you know, I do think that that the kind of liquidity call was a factor in in seeing those um those ETF outflows. I think importantly despite this surplus in Q1 still looking at an overall deficit for 2026 although lower than last year but still a deficit. So I wonder if you can talk a little bit more about how the trends that we have seen in the first quarter could change over the course of the year to create that deficit. I know you talked about how mine supply was a little bit unusual in in Q1. Anything you would add on that note? Yeah. So, on the iron supply side of things, you know, I think we'll um we've got a pretty flat outlook on a year-over-year basis. So, um uh you know, actually very very muted supply growth. It was just it's just the seasonality shifted effectively from having weak first quarter uh to to to smoothing out production for the course of the year. Um in terms of uh the demand side of things, uh we see actually fairly good demand in terms of um uh the industrial demand and uh jewelry demand with the exception in in jewelry terms of a little bit of weakness in China. Um but automotive demand, we we've we've actually scaled back our vehicle production numbers by about a million units relating to higher oil prices and so on. Um but in fact we've actually ended up increasing our automotive demand for platinum uh on increased heavy duty production forecasts and things like that. So so you know the kind of um automotive industrial and jewelry side of things is looking pretty strong. I think I think the key thing really is reflecting on what happened in Q1 and those ETF and exchange stock outflows. We're expecting investment to return and and recoup some of those Q1 losses and that's what results in the forecast for a deficit of about 300,000 ounces for 2026. uh you know and I think as I kind of hinted to um in my in in the opening um statements when we were talking about London Platinum week, some of the motivations behind that investment flow is probably going to be linked to um you know concerns around the US dollar uh and and the the fiscal balance sheet, the federal balance sheet in the in the United States. The other the other point I wanted to bring up, it sounds like as these circumstances are playing out, we're going to see a depletion in above ground stocks to less than 3 months of supply. So I wonder if you can talk about that. How significant is that? Where are the stocks usually at? Just so we have some context. Well, I mean I would start by saying that um you know kind of rule of thumb in commodity markets is anything less than about 6 months of demand in above ground stocks is considered to be uh you fundamentally low. That said uh you know we have to treat our any kind of above ground stock estimate for the PGMs because these numbers aren't reported. We have to treat them with a degree of caution. you know, these are estimates. Uh they're highly unlikely to be, you know, really really accurate in terms of the amount of metal and so therefore the months of cover and so on. So I think it's important to kind of look at the trends in above ground stocks rather than the absolute level. What we do know is that they are depleted and they are low. We can see that in in those things, you know, there's market tightness indicators that we've already discussed. Um and you know, if we see the deficit this year, we'll see those continue to deplete. And so um you know that's something that is is probably going to be a bit of a concern for for end users in terms of um having confidence in market liquidity and so on through the balance of of the year. I think we are seeing some some um you know like I said you know with the Q1 outflows from ETFs and exchange stocks we have seen a bit of an improvement of that liquidity profile for the time being but not a complete elimination of market tightness. Um but certainly it's something that's going to keep uh the market I think probably on its toes really through the rest of the year uh and will factor into value establishment uh value establishing sort of expectations and so on. >> Another point that I wanted to bring up the last time that we talked was toward the beginning of March. So the Iran war was really just beginning at that point. Now we've had this going on for a couple of months. How is that impacting the platinum market? Is there significant developments that you're seeing there? How how are you looking at that? >> Well, so far like I said, we you know we have downgraded slightly uh vehicle production forecasts for 2026. Um it really depends upon how long this conflict and you know the kind of second order impact of that the closures of the straight of uh continues for. I would say that there is a further um risk to demand the longer the conflict goes on. It's not just about oil and gas prices and energy prices and um you know higher rate expectations uh but it's also about things like um Middle Eastern supply of automotive aluminium. So the Middle East produces around 20% of global aluminium X exchina. 84% of that output is specialtity automotive alloys. And so you know that could if if if we see that um shortage persist uh that could be a bit of a drag on automotive production numbers. we are seeing or we we've heard actually through the course of London platinum week that quite a lot of the automakers have been much faster at shifting their supply chains than we were worried about. So that's encouraging but but fundamentally you know um that that's the availability of those specialtity alloys is a is a concern as time goes on. Uh you've also got helium soqar produces around a third of the world's helium supply. Helium is um you know absolutely critical for producing high-end semiconductors. So a shortage of helium uh may result in uh some semiconductor production shortfalls and that would potentially also impact vehicle production numbers. In terms of the impact however it's probably important to emphasize that the aluminium side of things uh is probably equally split between internal combustion engine hybrid vehicles and uh battery electric vehicles in terms of the impact. In terms of helium, uh there's a bit more of a skew to impacting battery electric vehicles because they tend to be more kind of uh chip hungry if you like. Uh and so um so that's probably where we'd see the bigger downside risk uh there. And of course that doesn't impact platinum or palladium or roodium demand >> on maybe a longer term basis. So the war is also creating a lot of concerns about energy energy supply chains and platinum has the the hydrogen technology element in in there. Do you see any impact on that front in the longer term? So, um, you know, I think the longer term, uh, perspective from from the, uh, war in Iran is what what what people have kind of been thinking about is, well, do higher, um, you know, gas gasoline and diesel prices mean that people are going to be pivoting more rapidly towards battery electrification? I'm not totally convinced that that's the case. um in Europe, which is probably the market that's the be most likely to see that sort of switch, uh there's a pretty strong correlation between oil oil and gas prices and um uh and electricity prices. So, you know, is it necessarily um more beneficial, more cost effective to switch TVs? Not totally sure. In other geographies, China's got a regulated electricity market. So, you know, there you could see um you perhaps faster adoption of battery electric vehicles. But overall, we're seeing the Chinese automotive market from a bed perspective being um that's a battery electric vehicle perspective being uh slightly weak actually uh through the first quarter of this year. Uh the US obviously would be another possible market. Um you you you've got a slightly weaker link between oil and gas prices and electricity prices in the US than you do in Europe. But it's just not really a market that we see as being really enthusiastic about adopting battery electric vehicles. Um the current US administration has has canceled a lot of the tax incentives uh for switching to battery electric vehicles for making those purchases. Um you've kind of got the drill baby drill kind of mantra that's being touted out there. And so uh actually if anything what we're seeing in the US is a bit of a pivot back towards uh bigger engine capacities and so therefore you need more PGMs in the exhaust treatment system. The the other thing in the US is that we're seeing a bit of a slowing of some of the emissions control legislation. So this is in two areas. Firstly, there's a softening or delay to the fleetwide CO2 reduction targets. Those targets would have been very supportive of automakers trying to produce and sell battery electric vehicles. That that that incentive has gone away. And so we see, you know, that being uh supportive for ICE and hybrid demand. Uh and they're also delaying the implementation of uh tier 4 emissions control legislation um which would have been um you know similarly quite punitive in terms of actually require would have required more PGMs in the vehicles but we think automakers would probably have tried to accommodate that by focusing on bevs rather than internal combustion engine vehicles whether they're pure ice or hybrids. So actually some of these changes in the US are are you know conversely actually quite supportive of longer higher for longer ice demand and higher for longer demand for PGMs. There's one thing on the Iran war that I think is kind of fun to well I mean it's war is it's not it's not a fun situation but you know it's kind of interesting to point out which is you've got the FIFA World Cup kicking off in North America um pretty soon. Uh if Iran does compete and the US um finishes third in its group and Iran finishes third in its group, then they could play each other on the 3rd of July. So the day before the 250th uh you know anniversary of US independence, which um would be something interesting to watch. You know, we could see uh the whole situation trying to be settled on the pitch. Maybe >> that would definitely be very interesting. Yeah, we are we are getting ready for a World Cup in Vancouver right now. So okay, that'll be a day to keep an eye on for sure. I wanted to at least bring up price briefly with you. I know that the World Platinum Investment Council isn't projecting prices, but it's been a pretty interesting time. You mentioned at the beginning of the year platinum went way up like all the other precious metals came back down. Now it's kind of found a holding pattern. Maybe the way to ask it is, are the themes that caused that spike at the beginning of the year, are those broadly still in place or how are you seeing it? Have there been big changes? >> No, I think I think you know you've asked the question in a in a very sort of neat way. Fundamentally, if we kind of anatomize the the price rally which started um you know more or less one year one year ago from today um I would say that the the kind of catalyst for starting the price rally was very much fundamental uh fundamentally driven. You've u we were at the time we were in our third year of um you know pretty sustained market deficits. uh you had extremely tight conditions in terms of elevated lease rates, strong backlidation in the London ATC market. You had the trade tensions um with the United States uh and you also actually had um a change in the way that some end users were um choosing to own platinum. So they with the high lease rates that was just proving to be economically punitive for them. So we saw people switch from leasing to ownership uh and um so fall off in in leasing volumes and that kind of reduced liquidity effectively in the market. You know the the actual end demand for metal didn't really change particularly as a result of this but there was just le less metal cycling through the market. Uh and so that that kind of tightened the liquidity side of things as the year unfolded. you know, we saw um a kind of shift particularly going into the fourth quarter towards a sort of sell America, sell US dollar sort of trade, pivot towards monetary like assets that benefits the whole of the precious metal complex. Um and you know really today I think actually both of those factors are still there. You've still got a market deficit forecast for this year. So we've still got you know the very very supportive fundamental outlook. You've still got tightness in the leasing market in the ATC market. And as I kind of alluded to earlier, you've still got, you know, potentially a return to this motivation to pivot away from the US dollar and treasuries towards monetary-l like assets, uh, including the the entire precious metal complex. And of course, platinum would be a significant beneficiary of that. >> Well, I think that ties it all together quite nicely, unless there's any final points, thoughts that you would leave investors with as we're heading into, I guess, the second half of the year at this point. >> Yeah. No, I think, you know, we've kind of covered everything. um just persistent deficits. Uh there's a lot of uh tailwinds to think about in terms of potential future investment flows and you know I think that the fundamentals kind of speak for themselves. So um yeah it's an interesting outlook. >> Definitely. Well look forward to having you back later on and for now once again I'm Charlotte Mloud with investing.com and this is Edward Sturk with the World Platinum Investment Council. Thank you for watching. If you like this video, make sure you hit the like button and subscribe to our channel. We'd also love to hear your thoughts, so leave us a comment below.
Edward Sterck: Platinum Market Still Tight, Will Price Move in 2026?
Summary
Edward Sterck shares insights on the World Platinum Investment Council’s latest quarterly report, explaining that although Q1 …Transcript
I'm Charlotte Mloud with investingnews.com and here today with me is Edward Sturk, director of research at the World Platinum Investment Council. Thank you so much for being here. Great to have you as always. >> Sean, thank you for the kind invitation. It's always great to chat. >> Great to have you back as always and it sounds like it's the perfect time to have you. We were talking just before we turned the camera on about how you just wrapped up London Platinum Week. So I wonder if you can start by sharing any key takeaways that we should be aware of. >> Yeah. No, absolutely. I'd be delighted to. So London Platinum Week, it's one of three kind of platinum weeks in inverted commas around the world. You've got uh London uh in May, Shanghai Platinum Week in July, and then New York platinum week in September. Um and it's really, you know, those those events are kind of opportunities for the whole of the industry globally to come together and um chat to each other and try and discover what's going on in the in the PGM space. And we're not just talking about platinum, but also palladium, roodium and um ruinium, meridium and osmium and so on. Um so I'd say in terms of the event itself um you know the the view last year as a contrast was um you know extremely bullish. uh prices began to move on the Tuesday of of platinum week and um you know have kind of doubled since then. Um where things stand today I I would say is uh kind of a little bit mixed. People are trying to still trying to work out what they've learned. Um you know we do see some potential headwinds to demand um from the automotive space related to the the conflict in the Middle East. Uh but on the other hand, we've discovered that there are some new end uses for for PGMs in things like um AI that we possibly hadn't really been aware of before. Uh not yet enough detail really to kind of accurately quantify what that demand pool looks like. Um but could be a good accelerant for platinum, for aridium and ethnium in particular. Um and you know I think if we think about the uh the broader picture from an investment perspective uh we saw strong investment demand for bars and coins in the first quarter of this year. Um we saw the precious metal rally obviously um lose momentum kind of in in in the sort of January time period but prices have remained actually pretty elevated and um you know pretty attractive levels. uh uh I think the you know the conflict in the Middle East has been uh pretty important in terms of um effectively driving inflation and so therefore expectations for higher interest rates around the world. Uh and as a result particularly talking about Federal Reserve rates in the US that lead leads to a a theoretical outlook for a stronger US dollar and therefore weaker US dollar commodity prices. That's kind of what took the wind out of the sales if you like for the precious metals rally. Uh that said, you know, I think there are some challenges associated with that uh that outlook. Uh inflation is exogenous. It's being driven by the conflict by high oil prices. Um and you know the US balance sheet is still extreme extremely stressed. You got debt to GDP at the the highest level ever. Um higher even than at the end of the Second World War. And you know, we've got about a 70 basis point shift in terms of Fed Reserve rate expectations to now from just before the conflict started. Every basis point equates to roughly about $3.3 billion of additional interest payments alone for the for the federal government in the US to make every year. So, you know, it's quite a it's just putting extra strain on the US balance sheet. And I think you know we could see a scenario where we see later this year that kind of motivation behind um you switch to to monetary type assets particularly precious metals and platinum that we saw come through in the in the fourth quarter of last year. You know that could return again in the second half of this year and be a big driving factor behind um you know sort of increased investment flows. >> Definitely a lot of factors at play moving the market right now and we'll get into those in a little bit greater depth. The World Platinum Investment Council's Q1 report just came out. So that plays into this too. And one point I wanted to start by pulling out there is that the market was in its first surplus in six quarters I believe. So I wonder you've talked a little bit about market dynamics. Can you share what led to that that surplus? >> Uh well there's a couple of things really. So um we've got uh well we had increased supply year in the first quarter of this year. Um in terms of mine supply, uh that was largely due to on a comparative basis compared to Q1 last year. Uh mine supply was was heavily impacted last year by flooding in South Africa. Uh and so you know on a relative basis we've seen a strong result this year because we haven't had a repetition of that. But you've also had um some other factors like uh deferrals of um planned maintenance which might which historically have always occurred in the first quarter to later in the year. So it's just kind of taking away a little bit of that seasonality. Q1 is normally very very weak from a wine supply perspective and then you tend to see progressively higher output as the year unfolds. Uh we've also got some growth in recycling supply. So that's principally price driven. Um effectively uh with higher prices uh things like lower grade spends water cats are more economic and so you can put more of them through your your your your smelters and uh and refineries recover more metal. That's a fairly temporary thing we think. Um but we are you know taking a conservative view and we assume that looking at the year as a whole we see recycling increase by around 9% year on year. So you know price growth as I said on the other side of the equation um demand's actually been um you know pretty good in fact in in most most um most segments but the exception really is in terms of investment demand. So there's two things that we capture within our investment demand flows that uh were negative in the quarter. Firstly with the kind of stalling of the precious metal rally we saw um some outflows from ETFs. Uh I think that partially that was profit taking but you know actually it was probably also a bit of a kind of liquidity call with anyone with any kind of energy exposure um needing you know I guess kind of call on cash to cover or or support margins for for their energy investments precious metals and this isn't just platinum it was kind of across the board was were used as a source of liquidity so those outflows obviously count as a negative demand factor in the quarter we also saw a little bit of an easing of the trade tensions in the uh exchange stocks linked to the CME um built up significantly last year to you know really elevated levels because you saw strong contango in the forward curve um due to fears around potential tariffs in the future um and so uh just with a bit of the an easing of the the kind of trade tensions and given that you've still got things like extremely elevated lease rates uh in the European market in the London market um if you could it made sense to take some of that metal out of the CME warehouses and put it back into the lease market. Now, I think the key thing is once we had that surplus in the first quarter and it was related to those ETF and exchange stock outflows, that was not enough to really kind of take the tension out of the market. So, if we look at those lease rates and you look at things like the the backidation in the London OTC forward market, uh we've still got elevated lease rates, we've still got backquidation. So even that release of almost half a million ounces of metal back into the market hasn't been enough to really satisfy uh the the market tension. You know, we've still seen those um above ground stocks that have been depleted over multiple years of of deficits just aren't being replenished effectively to to the level needed to to really um you know bring total liquidity back to the market and ease ease that tightness. >> Right. I see what you're saying there. And on the investment side, I thought it was it was pretty interesting to see the divergence there between bar and coin and ETF demand. I wonder if there's anything more you could say there in terms of what we were seeing geographically, regionally. Any any takeaways that we should note there? >> Yeah, so foreign coin demand obviously is uh you know kind of more retailled. Um we started the year with a lot of enthusiasm for precious metals really continuing um you know that Q4 uh sort of excitement last year. Um and so that translates into really strong bar and coin demand. China was a big driver of that but we also saw strength in other markets as well. That's that that that demand was particularly robust in January. It it did taper off as we went through the rest of the first quarter. Um you know I think the kind of end of the people people were kind of investing to a degree on the trend in precious metals. um as as the steam came out of that rally, a little bit more conservatism, people thinking about where is value here. As price came back a bit, we have seen um you some some return to bar and coin demand uh growth uh as you can probably imagine. But in terms of ETFs, uh like I said, you know, typically it's a bit more institutional in terms of the the kind of holder profile. Uh and you know, I do think that that the kind of liquidity call was a factor in in seeing those um those ETF outflows. I think importantly despite this surplus in Q1 still looking at an overall deficit for 2026 although lower than last year but still a deficit. So I wonder if you can talk a little bit more about how the trends that we have seen in the first quarter could change over the course of the year to create that deficit. I know you talked about how mine supply was a little bit unusual in in Q1. Anything you would add on that note? Yeah. So, on the iron supply side of things, you know, I think we'll um we've got a pretty flat outlook on a year-over-year basis. So, um uh you know, actually very very muted supply growth. It was just it's just the seasonality shifted effectively from having weak first quarter uh to to to smoothing out production for the course of the year. Um in terms of uh the demand side of things, uh we see actually fairly good demand in terms of um uh the industrial demand and uh jewelry demand with the exception in in jewelry terms of a little bit of weakness in China. Um but automotive demand, we we've we've actually scaled back our vehicle production numbers by about a million units relating to higher oil prices and so on. Um but in fact we've actually ended up increasing our automotive demand for platinum uh on increased heavy duty production forecasts and things like that. So so you know the kind of um automotive industrial and jewelry side of things is looking pretty strong. I think I think the key thing really is reflecting on what happened in Q1 and those ETF and exchange stock outflows. We're expecting investment to return and and recoup some of those Q1 losses and that's what results in the forecast for a deficit of about 300,000 ounces for 2026. uh you know and I think as I kind of hinted to um in my in in the opening um statements when we were talking about London Platinum week, some of the motivations behind that investment flow is probably going to be linked to um you know concerns around the US dollar uh and and the the fiscal balance sheet, the federal balance sheet in the in the United States. The other the other point I wanted to bring up, it sounds like as these circumstances are playing out, we're going to see a depletion in above ground stocks to less than 3 months of supply. So I wonder if you can talk about that. How significant is that? Where are the stocks usually at? Just so we have some context. Well, I mean I would start by saying that um you know kind of rule of thumb in commodity markets is anything less than about 6 months of demand in above ground stocks is considered to be uh you fundamentally low. That said uh you know we have to treat our any kind of above ground stock estimate for the PGMs because these numbers aren't reported. We have to treat them with a degree of caution. you know, these are estimates. Uh they're highly unlikely to be, you know, really really accurate in terms of the amount of metal and so therefore the months of cover and so on. So I think it's important to kind of look at the trends in above ground stocks rather than the absolute level. What we do know is that they are depleted and they are low. We can see that in in those things, you know, there's market tightness indicators that we've already discussed. Um and you know, if we see the deficit this year, we'll see those continue to deplete. And so um you know that's something that is is probably going to be a bit of a concern for for end users in terms of um having confidence in market liquidity and so on through the balance of of the year. I think we are seeing some some um you know like I said you know with the Q1 outflows from ETFs and exchange stocks we have seen a bit of an improvement of that liquidity profile for the time being but not a complete elimination of market tightness. Um but certainly it's something that's going to keep uh the market I think probably on its toes really through the rest of the year uh and will factor into value establishment uh value establishing sort of expectations and so on. >> Another point that I wanted to bring up the last time that we talked was toward the beginning of March. So the Iran war was really just beginning at that point. Now we've had this going on for a couple of months. How is that impacting the platinum market? Is there significant developments that you're seeing there? How how are you looking at that? >> Well, so far like I said, we you know we have downgraded slightly uh vehicle production forecasts for 2026. Um it really depends upon how long this conflict and you know the kind of second order impact of that the closures of the straight of uh continues for. I would say that there is a further um risk to demand the longer the conflict goes on. It's not just about oil and gas prices and energy prices and um you know higher rate expectations uh but it's also about things like um Middle Eastern supply of automotive aluminium. So the Middle East produces around 20% of global aluminium X exchina. 84% of that output is specialtity automotive alloys. And so you know that could if if if we see that um shortage persist uh that could be a bit of a drag on automotive production numbers. we are seeing or we we've heard actually through the course of London platinum week that quite a lot of the automakers have been much faster at shifting their supply chains than we were worried about. So that's encouraging but but fundamentally you know um that that's the availability of those specialtity alloys is a is a concern as time goes on. Uh you've also got helium soqar produces around a third of the world's helium supply. Helium is um you know absolutely critical for producing high-end semiconductors. So a shortage of helium uh may result in uh some semiconductor production shortfalls and that would potentially also impact vehicle production numbers. In terms of the impact however it's probably important to emphasize that the aluminium side of things uh is probably equally split between internal combustion engine hybrid vehicles and uh battery electric vehicles in terms of the impact. In terms of helium, uh there's a bit more of a skew to impacting battery electric vehicles because they tend to be more kind of uh chip hungry if you like. Uh and so um so that's probably where we'd see the bigger downside risk uh there. And of course that doesn't impact platinum or palladium or roodium demand >> on maybe a longer term basis. So the war is also creating a lot of concerns about energy energy supply chains and platinum has the the hydrogen technology element in in there. Do you see any impact on that front in the longer term? So, um, you know, I think the longer term, uh, perspective from from the, uh, war in Iran is what what what people have kind of been thinking about is, well, do higher, um, you know, gas gasoline and diesel prices mean that people are going to be pivoting more rapidly towards battery electrification? I'm not totally convinced that that's the case. um in Europe, which is probably the market that's the be most likely to see that sort of switch, uh there's a pretty strong correlation between oil oil and gas prices and um uh and electricity prices. So, you know, is it necessarily um more beneficial, more cost effective to switch TVs? Not totally sure. In other geographies, China's got a regulated electricity market. So, you know, there you could see um you perhaps faster adoption of battery electric vehicles. But overall, we're seeing the Chinese automotive market from a bed perspective being um that's a battery electric vehicle perspective being uh slightly weak actually uh through the first quarter of this year. Uh the US obviously would be another possible market. Um you you you've got a slightly weaker link between oil and gas prices and electricity prices in the US than you do in Europe. But it's just not really a market that we see as being really enthusiastic about adopting battery electric vehicles. Um the current US administration has has canceled a lot of the tax incentives uh for switching to battery electric vehicles for making those purchases. Um you've kind of got the drill baby drill kind of mantra that's being touted out there. And so uh actually if anything what we're seeing in the US is a bit of a pivot back towards uh bigger engine capacities and so therefore you need more PGMs in the exhaust treatment system. The the other thing in the US is that we're seeing a bit of a slowing of some of the emissions control legislation. So this is in two areas. Firstly, there's a softening or delay to the fleetwide CO2 reduction targets. Those targets would have been very supportive of automakers trying to produce and sell battery electric vehicles. That that that incentive has gone away. And so we see, you know, that being uh supportive for ICE and hybrid demand. Uh and they're also delaying the implementation of uh tier 4 emissions control legislation um which would have been um you know similarly quite punitive in terms of actually require would have required more PGMs in the vehicles but we think automakers would probably have tried to accommodate that by focusing on bevs rather than internal combustion engine vehicles whether they're pure ice or hybrids. So actually some of these changes in the US are are you know conversely actually quite supportive of longer higher for longer ice demand and higher for longer demand for PGMs. There's one thing on the Iran war that I think is kind of fun to well I mean it's war is it's not it's not a fun situation but you know it's kind of interesting to point out which is you've got the FIFA World Cup kicking off in North America um pretty soon. Uh if Iran does compete and the US um finishes third in its group and Iran finishes third in its group, then they could play each other on the 3rd of July. So the day before the 250th uh you know anniversary of US independence, which um would be something interesting to watch. You know, we could see uh the whole situation trying to be settled on the pitch. Maybe >> that would definitely be very interesting. Yeah, we are we are getting ready for a World Cup in Vancouver right now. So okay, that'll be a day to keep an eye on for sure. I wanted to at least bring up price briefly with you. I know that the World Platinum Investment Council isn't projecting prices, but it's been a pretty interesting time. You mentioned at the beginning of the year platinum went way up like all the other precious metals came back down. Now it's kind of found a holding pattern. Maybe the way to ask it is, are the themes that caused that spike at the beginning of the year, are those broadly still in place or how are you seeing it? Have there been big changes? >> No, I think I think you know you've asked the question in a in a very sort of neat way. Fundamentally, if we kind of anatomize the the price rally which started um you know more or less one year one year ago from today um I would say that the the kind of catalyst for starting the price rally was very much fundamental uh fundamentally driven. You've u we were at the time we were in our third year of um you know pretty sustained market deficits. uh you had extremely tight conditions in terms of elevated lease rates, strong backlidation in the London ATC market. You had the trade tensions um with the United States uh and you also actually had um a change in the way that some end users were um choosing to own platinum. So they with the high lease rates that was just proving to be economically punitive for them. So we saw people switch from leasing to ownership uh and um so fall off in in leasing volumes and that kind of reduced liquidity effectively in the market. You know the the actual end demand for metal didn't really change particularly as a result of this but there was just le less metal cycling through the market. Uh and so that that kind of tightened the liquidity side of things as the year unfolded. you know, we saw um a kind of shift particularly going into the fourth quarter towards a sort of sell America, sell US dollar sort of trade, pivot towards monetary like assets that benefits the whole of the precious metal complex. Um and you know really today I think actually both of those factors are still there. You've still got a market deficit forecast for this year. So we've still got you know the very very supportive fundamental outlook. You've still got tightness in the leasing market in the ATC market. And as I kind of alluded to earlier, you've still got, you know, potentially a return to this motivation to pivot away from the US dollar and treasuries towards monetary-l like assets, uh, including the the entire precious metal complex. And of course, platinum would be a significant beneficiary of that. >> Well, I think that ties it all together quite nicely, unless there's any final points, thoughts that you would leave investors with as we're heading into, I guess, the second half of the year at this point. >> Yeah. No, I think, you know, we've kind of covered everything. um just persistent deficits. Uh there's a lot of uh tailwinds to think about in terms of potential future investment flows and you know I think that the fundamentals kind of speak for themselves. So um yeah it's an interesting outlook. >> Definitely. Well look forward to having you back later on and for now once again I'm Charlotte Mloud with investing.com and this is Edward Sturk with the World Platinum Investment Council. Thank you for watching. If you like this video, make sure you hit the like button and subscribe to our channel. We'd also love to hear your thoughts, so leave us a comment below.