Decade-long platinum decline ends as hydrogen boosts outlook: Reuters poll

By Sumita Layek and Peter Hobson

BENGALURU (Reuters) - Analysts and traders have sharply raised their platinum price forecasts as expectations of tighter supply and rising demand from the auto and hydrogen industries start to reverse a decade of declines, a Reuters poll showed on Tuesday.

The poll also returned a higher forecast for palladium after flooding at the biggest supplier, Russia's Nornickel, worsened a supply shortage.

Both metals are used by automakers, who embed them in engine exhausts to reduce harmful emissions. Platinum is also used in industrial applications such as glassmaking and for jewellery and investment.

Years of oversupply drove platinum to an 18-year low of $558 an ounce last year, while undersupply has pushed palladium to record levels around $2,900 an ounce.

(Graphic: Palladium overtakes platinum: https://fingfx.thomsonreuters.com/gfx/ce/xlbpgedkjpq/PGM%20POLL%20APRIL.JPG)

Both are benefitting from a rebound in auto production and tightening emissions limits, and some automakers are switching to platinum from palladium to save money.

The move to electric vehicles threatens demand, but platinum should benefit if hydrogen fuel cells which use the metal also become widespread. Platinum prices bounced to a 6-1/2 year high of $1,336.50 an ounce in February.

"This is underpinned by a strong outlook from the auto sector ... and, for the much longer term, the overdue implementation of fuel cell-powered vehicles," said StoneX analyst Rhona O'Connell.

Platinum will average $1,222 an ounce in 2021 and $1,253 in 2022, according to the median response from the poll of 34 analysts and traders conducted this month.

A similar poll three months ago forecast averages of $1,044 for 2021 and $1,082 for 2022. Platinum averaged $883 in 2020.

Palladium will average $2,552 an ounce this year and $2,450 in 2022, the poll found - up slightly from predictions of $2,410 for 2021 and $2,360 for 2022 in the poll in January.

Palladium averaged $2,196 last year.

"2021 looks like another year of a deep deficit (for palladium)," said WisdomTree analyst Nitesh Shah. "But at some point, with the shift to electrification, the market will balance, and prices will ease," he said.

(Reporting by Peter Hobson in London and Sumita Layek in Bengaluru. Editing by Pratima Desai and Mark Potter)