As Russia’s Palladium Supplies are Uncertain, Automakers are Switching to Platinum: WPIC

The uncertainty caused by the ongoing Russia-Ukraine war is impacting almost everyone on the
planet. Automakers are also among them. As they are uncertain about the supply of palladium from Russia due to trade bans and other factors, they are switching to platinum. The World Platinum Investment Council (WPIC) shared this information. It also predicted a large surplus in the platinum market this year.
A Cost-Effective Solution
Automakers were already switching to platinum because it is a cheaper alternative to palladium and helps them to be more cost-effective and save money. Now, they are opting for a faster transition, so they don't have to worry about supply problems. Impact on Pricing The rising demand for platinum would likely increase its price. Similarly, the prices of palladium might reduce as the demand shrinks.
Russia’s Role
Russia accounts for 25-30% of the global supply of palladium. It also accounts for 8-10% of the global supply of platinum. Though there is no visible sign that Russia's exports have been reduced by sanctions on the country since the war with Ukraine began in February, as the war is not ending, it is likely more companies would boycott Russian metals, and the governments might impose new restrictions.
Expert Opinion
According to Trevor Raymond, the WPIC's head of research, the substitution efforts are rising quickly. Trevor stated, " The substitution effort has gone up hugely. The amount of savings an automaker can make is massive. What's been added on top of that is concerns about the availability (of palladium).
The Data
Platinum costs about half as much as palladium. One needs to pay $950 for an ounce. Automakers use about 2.5 to 3 million ounces of platinum and around 8.5 million ounces of palladium yearly.

In the latest quarterly report, the WPIC stated that about 8 million ounces a year platinum market would be oversupplied by 627,000 ounces this year as there was a surplus of 1.13 million ounces in 2021. In March, WPIC forecasted a surplus of 652,000 ounces for 2022.

The WPIC also said platinum demand reduced by 26% year-on-year during the January-March quarter, and supply fell by 13%. Hence, the market was oversupplied by 167,000 ounces.
Future Forecast
It also stated that for 2022, the supply would be 5% less than it was in 2021, while the demand would be greater by 2%. The auto industry demand is expected to rise by 15% due to increased production of light-duty vehicles, higher loadings per vehicle to meet stricter emissions regulations, and substitution from palladium.
Reference:

https://www.reuters.com/business/autos-transportation/russia-risks speed-up-automakers-switch-
palladium-platinum-wpic-says-2022-05-15/