PLATINUM QUARTERLY PRESENTATION
Q4 2017
London
8th March, 2018
COPYRIGHT AND DISCLAIMER
IMPORTANT NOTICE AND DISCLAIMER: This publication is general and solely for educational purposes. The publisher, The World Platinum Investment Council,
has been formed by the world’s leading platinum producers to develop the market for platinum investment demand. Its mission is to stimulate investor demand for
physical platinum through both actionable insights and targeted development: providing investors with the information to support informed decisions regarding
platinum; working with financial institutions and market participants to develop products and channels that investors need. No part of this publication may be
reproduced or distributed in any manner without attribution to the authors. Unless otherwise specified in this document all material is © World Platinum Investment
Council 2018. Material sourced from third parties may be copyright material of such third parties and their rights are reserved. Content within the publication that has
been provided by SFA, one of our third party providers, is © SFA Copyright reserved. All copyright and other intellectual property rights in such content contained in
this publication remain the property of SFA, and no person other than SFA shall be entitled to register any intellectual property rights in the information, or data
herein. The analysis, data and other information attributed to SFA reflect SFA’s judgment as of the date of the document and are subject to change without
notice. No part of the content provided by SFA shall be used for the specific purpose of accessing capital markets (fundraising) without the written permission of
SFA.
This publication is not, and should not be construed to be, an offer to sell or a solicitation of an offer to buy any security. With this publication, neither the publisher
nor SFA intend to transmit any order for, arrange for, advise on, act as agent in relation to, or otherwise facilitate any transaction involving securities or commodities
regardless of whether such are otherwise referenced in it. This publication is not intended to provide tax, legal, or investment advice and nothing in it should be
construed as a recommendation to buy, sell, or hold any investment or security or to engage in any investment strategy or transaction. Neither the publisher nor SFA
is, or purports to be, a broker-dealer, a registered investment advisor, or otherwise registered under the laws of the United States or the United Kingdom, including
under the Financial Services and Markets Act 2000 or Senior Managers and Certifications Regime or by the Financial Conduct Authority.
This publication is not, and should not be construed to be, personalized investment advice directed to or appropriate for any particular investor. Any investment
should be made only after consulting a professional investment advisor. You are solely responsible for determining whether any investment, investment strategy,
security or related transaction is appropriate for you based on your investment objectives, financial circumstances and risk tolerance. You should consult your
business, legal, tax or accounting advisors regarding your specific business, legal or tax situation or circumstances.
The information on which this publication is based is believed to be reliable. Nevertheless, neither the publisher nor any third party can guarantee the accuracy or
completeness of the information. This publication contains forward-looking statements, including statements regarding expected continual growth of the industry. The
publisher notes that statements contained in the publication that look forward in time, which include everything other than historical information, involve risks and
uncertainties that may affect actual results and neither the publisher nor any third party accepts any liability whatsoever for any loss or damage suffered by any
person in reliance on the information in the publication.
The logos, services marks and trademarks of the World Platinum Investment Council are owned exclusively by it. All other trademarks used in this publication are the
property of their respective trademark holders. The publisher is not affiliated, connected, or associated with, and is not sponsored, approved, or originated by, the
trademark holders unless otherwise stated. No claim is made by the publisher to any rights in any third-party trademarks.
2
AGENDA: PLATINUM QUARTERLY
2017, Q4 2017 AND 2018 FORECAST
1. Introduction
Paul Wilson, CEO, WPIC
2. Platinum Quarterly, Fundamentals review
Trevor Raymond, Director of Research, WPIC
3. Fundamental insights
Trevor Raymond
4. Questions
Paul Wilson
Trevor Raymond
3
AGENDA: PLATINUM QUARTERLY
2017, Q4 2017 AND 2018 FORECAST
1. Introduction
Paul Wilson
2. Platinum Quarterly, Fundamentals review
Supply, demand and balance
• 2017
• Q4’17
• 2018 forecast
Trevor Raymond, Director of Research, WPIC
3. Fundamental insights
Trevor Raymond
4. Questions
Paul Wilson
Trevor Raymond
4
WPIC RESEARCH IS MIFID II “COMPLIANT”
5
WPIC Research MiFID II Status
The World Platinum Investment Council (WPIC) has undertaken an internal and external review of its
content and services for MiFID II. As a result WPIC highlights the following to the recipients of its
research services, and their Compliance/Legal departments:
WPIC research content falls clearly within the Minor Non-Monetary Benefit Category, and can continue to be
consumed by all asset managers free of charge. WPIC research can be freely shared across investment
organisations.
1. WPIC does not conduct any financial instrument execution business. WPIC does not have any market
making, sales trading, trading or share dealing activity. (No possible inducement).
2. WPIC content is disseminated widely and made available to all interested parties through a range of different
channels, therefore qualifying as a “Minor Non-Monetary Benefit” under MiFID II (ESMA/FCA/AMF). WPIC
research is made freely available through the WPIC website. WPIC does not have any permissioning
requirements on research aggregation platforms.
3. WPIC does not, and will not seek, any payment from consumers of our research services. WPIC makes it
clear to institutional investors that it does not seek payment from them for our freely available content.
More detailed information is available on the WPIC website: http://www.platinuminvestment.com/investment-
research/mifid-ii
SUPPLY 2016 2017 YoY, oz YoY, %
Refined Production 6,035 6,075 40 1%
South Africa 4,255 4,370 115 3%
Zimbabwe 490 445 -45 -9%
North America 395 365 -30 -8%
Russia 715 715 0 0%
Other 180 180 0 0%
Inc (-)/Dec (+) in Producer Inventory +30 +35 5 17%
Total Mining Supply 6,065 6,110 45 1%
Recycling 1,855 1,905 50 3%
Autocatalyst 1,225 1,340 115 9%
Jewellery 625 560 -65 -10%
Industrial 5 5 0 0%
Total Supply 7,920 8,015 95 1%
DEMAND
Automotive 3,490 3,395 -95 -3%
Jewellery 2,505 2,460 -45 -2%
Industrial 1,790 1,650 -140 -8%
Investment 535 260 -275 -51%
Total Demand 8,320 7,765 -555 -7%
Balance -400 250 - -
Above Ground Stocks 1,905 2,155 250 13%
2017: MARKET IN SURPLUS
6
• Strong S.A. mine supply, autocatalyst
recycling offset by weakness
elsewhere – flattish supply
• Moderate decline in automotive
demand – headwinds overestimated
• Lower jewellery demand due to
rebasing of India
• Investment demand down YoY; as
very strong Japan bar buying not
repeated
Source: WPIC Platinum Quarterly Q4 2017, SFA (Oxford)
SUPPLY Q4 2016 // Q3 2017 Q4 2017
Refined Production 1,490 1,570 1,540
South Africa 1,065 1,140 1,120
Zimbabwe 120 100 105
North America 85 95 90
Russia 170 185 185
Other 50 45 45
Inc(-)/Dec(+) in Producer Inventory -75 -10 +30
Total Mining Supply 1,415 1,560 1,570
Recycling 470 480 520
Autocatalyst 290 330 380
Jewellery 180 150 140
Industrial 0 0 0
Total Supply 1,885 2,040 2,090
Source: WPIC Platinum Quarterly Q4 2017, SFA (Oxford)
• Total supply +205 koz YoY
• Mine supply +155 koz YoY, given S.A.
outperformance and inventory release
• High prices increased autocatalyst
recycling
7
Q4 2017 SUPPLY: STRONG RECYCLING, MINING
SUPPORTED BY INVENTORY RELEASE
600
800
1,000
1,200
1,400
1,600
1,800
Q3'14 Q1'15 Q3'15 Q1'16 Q3'16 Q1'17 Q3'17
koz
MINING SUPPLY: INVENTORY DRAWDOWN BOLSTERS
SUPPLY AGAIN
Source: WPIC Platinum Quarterly Q4 2017, SFA (Oxford)
Total mining supply and refined production
Refined production Total mining supply
8
• Refined production -2% QoQ but +3%
YoY
• S.A. outperformed on lower safety
stoppages, operational improvements
• Further 30koz inventory drawdown,
though inventory now at “normal” levels
0
1,000
2,000
3,000
4,000
5,000
1985 1990 1995 2000 2005 2010 2015
Platinum Palladium Rhodium
0
500
1,000
1,500
2,000
1985 1990 1995 2000 2005 2010 2015
Recycling 'basket' USD/oz Platinum USD/oz
0
100
200
300
400
500
600
Q3'14 Q1'15 Q3'15 Q1'16 Q3'16 Q1'17 Q3'17
koz
RECYCLING SUPPLY: SURPRISE INCREASE IN
AUTOCATALYST RECYCLING
Source: WPIC Platinum Quarterly Q4 2017, SFA (Oxford). Johnson Matthey (PGM autocatalyst recycling volumes), Kitco, macrotrends. Recycling ‘basket’ calculated using the weighted average of
autocatalyst recycling volumes and prices.
Autocatalyst and jewellery recycling
Autocatalyst Jewellery
9
• Autocatalyst recycling +50 koz
• High palladium, rhodium (and scrap
steel) prices leading to increased
collection rates and processing of spent
autocatalysts
• Jewellery recycling -10 koz QoQ
Autocatalyst PGM recycling (koz) Autocatalyst PGM ‘basket’
DEMAND Q4 2016 // Q3 2017 Q4 2017
Automotive 885 810 865
Autocatalyst 850 770 830
Non-road 35 35 35
Jewellery 700 585 675
Industrial 410 415 405
Chemical 130 165 135
Petroleum 55 25 25
Electrical 40 40 40
Glass 5 50 20
Medical & Biomedical 75 45 75
Other 105 90 110
Investment 225 -10 95
Change in Bars, Coins 115 45 65
Change in ETF Holdings 115 -40 50
Change in Stocks Held by Exchanges -5 -15 -20
Total Demand 2,220 1,800 2,040
Balance -335 240 50
Source: WPIC Platinum Quarterly Q4 2017, SFA (Oxford) 10
Q4 2017 DEMAND: FLAT AUTO & INDUSTRIAL
• Automotive demand -2% YoY, but
recovering from a seasonally weak Q3
• Jewellery demand +15% QoQ, helped
by China resurgence and restocking
• Investment demand +105 koz QoQ
600
650
700
750
800
850
900
950
Q3'14 Q1'15 Q3'15 Q1'16 Q3'16 Q1'17 Q3'17
koz
Q4 2017 DEMAND: AUTOCATALYST DEMAND REBOUNDS
SEASONALLY
Source: WPIC Platinum Quarterly Q4 2017, SFA (Oxford). Bottom chart - ACEA, LMC, WPIC Research. HEVs – Hybrid Electric Vehicles; BEVs – Battery Electric Vehicles; PHEVs – Plug-in Hybrid
Electric Vehicles. European countries selected on the basis of both diesel and Alternative Fuel Vehicle data; representing c90% of EU+EFTA vehicles
Change in European cars Q4 2017 vs Q3 2017
Autocatalyst demand, quarterly
11
• Automotive demand down 20 koz YoY
• Falling European diesel share
continues to be a headwind for platinum
demand
• Diesel share not expected to continue
to fall as quickly
3.00 3.05 3.10 3.15 3.20 3.25 3.30
New cars - Q4-17
Increase from Other
Increase from PHEVs
Increase from BEVs
Decrease from HEVs / mild hybrids
Increase from Gasoline
Decrease from Diesel
New cars - Q3-17
European* cars (m)
-20%
-15%
-10%
-5%
0%
5%
10%
-200
-150
-100
-50
0
50
100
Q3'15 Q1'16 Q3'16 Q1'17 Q3'17
YoY
gro
wth
, %
koz,
YoY
gro
wth
200
300
400
500
600
700
800
900
Q3'14 Q1'15 Q3'15 Q1'16 Q3'16 Q1'17 Q3'17
koz
Q4 2017 DEMAND: JEWELLERY DEMAND REBOUNDS
HK tourists
Gold/Silver jwl sales
Pt jwl demand
Jewellery demand growth and economic drivers
12
• China – sequential increase but still
underperforming gold (Q4 2017 gold
jewellery demand +6% YoY)
• India – double-digit growth in platinum
outperforms gold (Q4 2017 gold
jewellery demand +4% YoY)
Jewellery demand
Source: Hong Kong Tourism Board, National Bureau of Statistics of China, WPIC Platinum Quarterly Q4 2017, SFA (Oxford), World Gold Council – Q4 2017 Gold Demand Trends
• Net demand -10 koz QoQ
• Chemical demand -30 koz QoQ
• Positive momentum in Medical (+30
koz QoQ) and Other (includes fuel
cells, +20 koz QoQ)
0
100
200
300
400
500
600
Q3'14 Q3'15 Q3'16 Q3'17
koz
Chemical
Petroleum
Electrical
Glass
Medical
Other
Q4 2017 DEMAND: INDUSTRIAL DEMAND FLAT
Source: WPIC Platinum Quarterly Q4 2017, SFA (Oxford) 13
Industrial demand
Industrial demand - split
100
125
150
175
200
200
250
300
350
400
Q3'14 Q1'15 Q3'15 Q1'16 Q3'16 Q1'17 Q3'17
Me
dic
al +
'Oth
er', ko
z
All
oth
er in
du
str
ial, k
oz
All other Medical + 'Other'
-400
-300
-200
-100
0
100
200
300
400
Q3'14 Q1'15 Q3'15 Q1'16 Q3'16 Q1'17 Q3'17
koz
Net
Q4 2017 DEMAND: ETFs, BAR/COIN DEMAND POSITIVE
Source: WPIC Platinum Quarterly Q4 2017, SFA (Oxford)
Investment demand by category
Bar and coin ETFs Exchange stocks
14
• Japan bar buying stimulated as prices
fell to ¥3,400/g
• 105 koz QoQ increase in ETF buying
activity
• US retail market potential
• New low-cost ETF launched in
the US – January 2018
• Multiple opportunities in China
• Shanghai office developing
investor allocation and product
partners
• Multi-channel investor
outreach in Japan
15
MARKET DEVELOPMENT – INCREASING PRODUCT
CHOICE & APPEAL TO WIDER RANGE OF INVESTORS
SUPPLY 2017 2018f YoY, oz YoY, %
Refined Production 6,075 5,850 -225 -4%
South Africa 4,370 4,175 -195 -4%
Zimbabwe 445 450 5 1%
North America 365 370 5 1%
Russia 715 685 -30 -4%
Other 180 170 -10 -6%
Inc (-)/Dec (+) in Producer Inventory +35 +0 -35 -100%
Total Mining Supply 6,110 5,850 -260 -4%
Recycling 1,905 1,965 60 3%
Autocatalyst 1,340 1,405 65 5%
Jewellery 560 555 -5 -1%
Industrial 5 5 0 0%
Total Supply 8,015 7,815 -200 -2%
DEMAND
Automotive 3,395 3,285 -110 -3%
Jewellery 2,460 2,505 45 2%
Industrial 1,650 1,750 100 6%
Investment 260 250 -10 -4%
Total Demand 7,765 7,790 25 0%
Balance 250 25 - -
Above Ground Stocks 2,155 2,180 25 1%
Source: WPIC Platinum Quarterly Q4 2017, SFA (Oxford) 16
2018 FORECAST: SUPPLY FALLING, DEMAND GROWING,
MARKET IN BALANCE
• Broad-based decline in mine supply
expected
• Automotive decline to be offset by
strong Industrial and recovering
Jewellery
• Market moving from a surplus in 2017
to balanced in 2018
AGENDA: PLATINUM QUARTERLY
2017, Q4 2017 AND 2018 FORECAST
1. Introduction
Paul Wilson
2. Platinum Quarterly, Fundamentals review
Trevor Raymond
3. Fundamental insights
Trevor Raymond, Director of Research, WPIC
4. Questions
Paul Wilson
Trevor Raymond
17
SOUTH AFRICA – POLITICAL BACKDROP IMPROVING
Source: Bloomberg, WPIC Research
USDZAR (inverted)
18
• Several positive political changes (new
S.A. President, new Minister of Mineral
Resources)
• S.A. producers will likely have to adapt
to a strong ZAR environment
• Usually, positive correlation between
strength of ZAR and USD platinum
price
Platinum (USD/oz) & USDZAR
2
4
6
8
10
12
14
16400
600
800
1,000
1,200
1,400
1,600
1,800
2000 2005 2010 2015
Platinum ZAR (inverted - rhs)
10
11
12
13
14
15
16
17
18
2015 2016 2017 2018
18th Dec '17 -New head of ruling party elected
14th Feb '18 - Old president resigns, new president appointed
9th Dec '15 -President fires finance minister
3rd Apr '17 - S&Pcuts S.A's credit rating to 'junk'
JEWELLERY – CHINA REVIVING, INDIA REBASED
Source: WPIC Platinum Quarterly Q4 2017, SFA (Oxford) 19
0
500
1,000
1,500
2,000
2,500
3,000
3,500
2013 2014 2015 2016 2017 2018
Jewellery demand Difference vs Nov-17
Jewellery demand (koz)
• China jewellery market improving
• India jewellery demand growing
strongly, PGI partners +46% in Q4
2017
• Despite downward revision to India,
jewellery still expected to grow YoY in
2018
Auto - Western Europe -passenger diesel, 15%
Auto - Western Europe -gasoline and other, 5%
Auto - North America, 6%
Auto - Japan, 6%
Auto - China, 3%
Auto - India, 2%
Auto - RoW, 7%
Jewellery, 32%
Industrial, 21%
Investment, 3%
0
10
20
30
40
50
60
2013 2014 2015 2016 2017 2018
AUTOMOTIVE DEMAND – EUROPE DIESEL IN CONTEXT
European diesel market share (%)
20Source: SFA (Oxford), NOTE* W. Europe auto demand split WPIC estimate. Based on 2017 platinum demand. LMC Automotive
• European passenger diesel decline
affects c15% of platinum demand
• Recent declines due to consumer fears
–policy uncertain
• Diesel car resale values under threat
Platinum demand – automotive in context
EUROPE DIESEL – WHAT’S HAPPENING?
Source: SMMT, EC, WPIC Research. HEVs – Hybrid Electric Vehicles; BEVs – Battery Electric Vehicles; PHEVs – Plug-in Hybrid Electric Vehicles. 21
UK powertrain market share
0.0%
1.5%
3.0%
4.5%
6.0%
7.5%
9.0%
0%
10%
20%
30%
40%
50%
60%
Jan-16 May-16 Sep-16 Jan-17 May-17 Sep-17
Diesel Petrol BEV (rhs)
PHEV (rhs) Petrol hybrid (rhs) Diesel hybrid (rhs)
Petrol
Diesel
10%
20%
30%
40%
50%
60%
90
110
130
150
170
190
199
7
199
8
199
9
200
0
200
1
200
2
200
3
200
4
200
5
200
6
200
7
200
8
200
9
201
0
201
1
201
2
201
3
201
4
201
5
201
6
201
7
UK CO2 emissions (g/km) EU 2021 CO2 target (g/km)
Diesel market share (rhs)
• German cities allowed to implement
diesel bans
• Reduction in diesel share leading to
demonstrably higher CO2 (EVs not
“saving the day”)
• CO2 fines increasingly likely (€8bn -
€13bn)
• Steps needed to flatten / increase
diesel share
UK CO2 emissions vs UK diesel market share
AUTOMOTIVE DEMAND – EUROPE WEAKNESS, REST
OF WORLD STRENGTH
Source: WPIC Platinum Quarterly Q4 2017, SFA (Oxford) 22
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
2013 2014 2015 2016 2017 2018f
koz
Automotive demand
W. Europe diesel headwinds expected to
be mostly offset by:
• Upside from U.S. passenger diesel
share, China heavy duty
• Growth in RoW
Source: JMAT, ECV International, ICCT *NOTE – vehicle manufacturer credits as based on MIIT interim proposals
Automotive demand
23
Fuel cell demand (c50 koz) growing strongly:
• China “New Energy Vehicle” (NEV)
incentives favour FCEVs over BEVs
(range benefit)
• Larger applications gaining traction
• Non-road applications being adopted
China NEV credits
New Energy Vehicle NEVElectric range
(km)
Per-vehicle
manufaturer credit*
Battery Electric Vehicle BEV 80-150 2
Plug-in Hybrid Electric
VehiclePHEV >50km 2
Fuel Cell Electric Vehicle FCEV >350km 5
AUTOMOTIVE DEMAND – MEDIUM TERM UPSIDE FROM
FUEL CELLS
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
Palladium Platinum - base Platinum -
Scenario 1
Platinum -
Scenario 2
W. Europe Japan North America China RoW
24
Longer term, switching upside (900 koz)
Scenario 1
• 20% from N. America -> +c410 koz
• 5% from Europe -> +c80 koz
Scenario 2
• 20% from China -> +c410 koz
Source: SFA (Oxford); WPIC Research (scenarios, based on 2016 demand)
Switching scenarios (koz) - Pt replacing Pd in gasoline cars
AUTOMOTIVE DEMAND – MEDIUM TERM UPSIDE FROM
SWITCHING
AGENDA: PLATINUM QUARTERLY
2017, Q4 2017 AND 2018 FORECAST
1. Introduction
Paul Wilson
2. Platinum Quarterly, Fundamentals review
Trevor Raymond
3. Fundamental insights
Trevor Raymond
4. Questions
Paul Wilson, CEO, WPIC
Trevor Raymond, Director of Research, WPIC
25