Hydrogen fuel-cell demand in focus, but auto industry 'sceptical'... 

 

A GLOBAL SLOWDOWN in sales of battery-electric vehicles means auto-industry demand for platinum and palladium is holding firm, experts agreed at this May's Platinum Week in London, but opinion remains split over the potential for hydrogen fuel-cell technology.

 

Besides investment, jewellery and industrial use of platinum, the metal currently finds 2/5ths of its end-user demand each year from autocatalysts to reduce harmful emissions from internal combustion engines. That demand has held firm despite the 'diesel scandal' of 2015 hitting sales of diesel-fuel passenger vehicles, due to tighter emissions standards – needing higher loadings of metal on each autocat – plus substitution for platinum of sister-metal palladium in gasoline systems thanks to the dramatic surge in palladium prices which followed the diesel scandal, accelerating on No.1 producer nation Russia's invasion of Ukraine in 2022. 

 

 

Looking ahead – and with governments worldwide setting deadlines between 2040 and 2050 for the end of new internal combustion engine (ICE) sales – "Future PGM demand growth will be galvanised by environmental and hydrogen applications," says the new 2024 supply-and-demand report from refining and tech specialists Johnson Matthey (LON:JMAT).

 

Stronger demand for platinum group metals (PGM) relies on the supply-side of the industry finding and developing new technology uses – a problem not faced by producers of base metals such as copper, nor in gold or silver – agrees Richard Andrew Stewart, chief regional officer Southern Africa for US-listed miner Sibanye Stillwater (JSE:SSW).

 

But for now, the No.1 question among attendees at Platinum Week 2024 in London was about the growth in battery-electric penetration of the vehicles market, he said.

 

"We will have failed if it's the still the No.1 question in 2025." 

 

As it is, battery-electric sales have slowed "near zero growth" compared to the past decade's relentless expansion in each of the world's 3 major auto markets, said Al Bedwell, director of global powertrain analysis at industrial trends consultancy GlobalData (LON:DATA), also speaking Tuesday afternoon to members of the London Platinum & Palladium Market at the trade association's annual seminar.

 

China's EV sales are heading for only 11% growth in 2024 on GlobalData's outlook, Bedwell said, while the USA continues to suffer from "patchy" charging infrastructure, and Europe is being hit by Germany's "abrupt removal" of government subsidies for new purchases.

 

 

"Is the move to electric cars running out of power?" asks UK broadcaster the BBC, pointing to a drop in sales by US-listed manufacturer Tesla (Nasdaq:TLSA) and a slowdown in EV sales at Chinese giant BYD.

 

"We need to buy a lot more EVs to hit climate targets," the BBC goes on, citing the International Energy Agency's call for the number of electric vehicles on the world's roads to rise 10-fold over the next decade.

 

The global slowdown in EV sales growth means "automotive demand [for platinum] is underpinned by a higher-for-longer [internal combustion engine] theme," says the latest quarterly report from the mining industry's World Platinum Investment Council, "with 2024 projected to be the strongest year for automotive demand for platinum" – needed for autocatalysts to reduce harmful emissions from diesel engines, and increasingly finding substitution to replace palladium in gasoline engine autocats – "since 2017."

 

On top of that, WPIC's latest quarterly report this week followed the move by analysts SFA Oxford – reporting for German refining group Heraeus – to strip out hydrogen-energy demand as a separate line from the wider 'Other Industrial' category in its data tables and forecasts.

 

Total industrial demand is forecast to drop 15% by weight in 2024 on WPIC's forecasts – which use data from specialist analysts Metals Focus – setting the lowest annual total since the Covid crash of 2020, thanks to last year's capacity expansions in the chemical and glass industries not being repeated in 2024.

 

Against those 33% and 25% drops respectively, the projected 128% jump in demand from the hydrogen industry (excluding fuel-cell vehicles) is dramatic. But even on top of 2023's 114% rise, this year's total demand from the hydrogen-energy sector is forecast to offset less than 1/5th of the 2024 drop among all other industrial sectors. 

 

Bedwell at GlobalData remains "sceptical" about the future for fuel cell passenger vehicles, telling LPPM seminar attendees on Tuesday that the very low volume of production will likely see just 12,000 FCEVs made worldwide in 2024. PGM refining and tech specialists Johnson Matthey (LON:JMAT) forecast a 50% rise to 15,000 of light-duty hydrogen fuel-cell vehicles for 2024, remaining "minimal" due to the "lack of subsidy support and a persistent shortage of hydrogen refuelling infrastructure [which] appears to have choked production and sales."

 

SFA Oxford see this year's total platinum demand from the hydrogen sector "stuttering" and rising by only 1/8th from 2023 – when the sector's demand more than doubled on SFA's data – to reach less than 2.8 tonnes in total.

 

Metals Focus' own forecasts in its PGM Focus put total 2024 hydrogen demand around 3.7 tonnes. That compares with total mine supply of 170 tonnes and a further 51 tonnes coming from recycling.

 

"Total supply is continuing a multi-year downward trend," says WPIC of the Metals Focus numbers, "with 2024 expected to be the weakest year in our time series from 2013."

 

Metals Focus forecasts another "deep" deficit of physical platinum supply against demand in 2024, albeit smaller than 2023's series record deficit. But with large stockpiles helping "offset the impact of this shortfall" they predict the platinum price will remain flat year-on-year.

 

Half of platinum-group metals mining outside of Russia is now making a loss at current prices, Sibanye's Stewart said. But lower output alone won't boost prices he believes, because the PGM market is driven instead by technology use, related legislation, and the economic cycle.

 

With gold prices hitting new all-time highs today as silver reaches 2012 levels in US Dollar terms, platinum is currently trading at half its 2008 peak, albeit reaching 12-month highs above $1000 per Troy ounce during Platinum Week. Palladium has meantime fallen by 2/3rds from its New Year 2022 records.