According to media reports, investors are investing in platinum related funds at the fastest pace in four years, betting on the revival of interest in hybrid vehicles and the stable demand for traditional internal combustion engine vehicles.
Data shows that the holdings of exchange traded funds (ETFs) supported by physical platinum surged by approximately 444000 ounces in the second quarter, which is equivalent to about 6% of annual demand and the largest quarterly increase since 2020.
It is understood that platinum is often used in automobile emission systems, which can act as a catalyst to convert harmful substances in exhaust gas into harmless substances. Therefore, both hybrid and traditional internal combustion engine vehicles will use platinum to reduce harmful emissions.
In recent years, with the increasing vigilance of consumers towards pure electric vehicles and the surge in sales of hybrid cars, major car manufacturers have once again invested heavily in this field. At the same time, these car companies also expect the existence of fuel vehicles to be longer than previously expected.
Edward Sterck, the research director of the World Platinum Investment Council, said, "Investors' interest comes from the slowdown in the growth of battery electric vehicles and the high demand for fuel vehicles. Hydrogen energy is also a major highlight of platinum's future development
Spot Platinum Daily Chart
Since the beginning of the year, spot platinum prices have mostly been below $1000 per ounce, until recent months when they have stabilized at this level. Analysts say that some investors who profit from trading gold are shifting their funds into precious metals such as silver and platinum.
Nitesh Shah, head of commodity research at WisdomTree, which offers platinum ETFs, said: "Gold and silver prices have risen strongly, and people expect platinum to be the next rising commodity." During the year, ETFs linked to palladium also saw strong inflows, equivalent to 200000 ounces.
For traditional car manufacturers such as Ford and Stellantis, compared to pure electric vehicles, investing in hybrid technology is much smaller and can generate higher profit margins. Toyota, the world's largest delivery company, is also continuing to bet on internal combustion engines and hybrid models.
In this context, data from BNP Paribas shows that sales of hybrid vehicles in Europe have climbed 21% this year, reaching 1.3 million units, while electric vehicles have only grown by 2%. Compared to that, the sales of hybrid vehicles in the United States grew faster year-on-year, reaching 35%.
Philippe Houchous, an analyst at Jefferies, said, "Everything is very different from a year ago. Some manufacturers who had originally decided to stop production are now adding hybrid models back to their catalogs. Hybrid cars have a long lifespan, and plug-in hybrid cars have a longer lifespan
Houchous added, "They all require catalytic converters." Catalytic converters are part of the car exhaust system, and reports indicate that the platinum and palladium content required for catalytic converters in hybrid vehicles is higher than that of traditional gasoline and diesel engines.
At the same time, the slowing demand for electric vehicles has hit the prices of battery metals such as lithium, cobalt, and nickel. Nicky Shiels, an analyst at Swiss precious metal refining and trading firm MKS Pamp, said that the slowdown in investment demand for platinum in electric vehicles is a complete tailwind.
Paul Syms, head of commodity product management at Invesco, stated that platinum demand will also be boosted by artificial intelligence and data storage, as this metal is used for hard disk drives (HDDs), and supply is expected to remain at a lower level.
