JM: Platinum market to move into surplus for the first time in six years

17 May 2017

With autocatalyst, jewelery and investment demand forecast to slow, the platinum market is predicted to move into surplus in 2017 for the first time in six years, according to the May 2017 edition of the PGM Market Report by Johnson Matthey.

The predicted decline in the autocatalyst platinum market is to a large extent due to the declining use of Pt in European diesel cars, which is driven by the Real Driving Emissions (RDE) legislation. To pass the RDE tests, NOx emissions must be controlled over a wider range of operating conditions. This requires a wider use of SCR technology, which uses relatively low Pt loadings, replacing the platinum-intensive NOx adsorber catalysts (or lean NOx traps, LNT) that were used in many earlier generation vehicles.

The 2016 was the fifth consecutive year of Pt deficit, driven by a strong demand from the automotive, industrial and investment sectors, which compensated for weakness in the jewelery sector. The autocatalyst demand for platinum was at an eight-year high last year, while industrial consumption also reached a five-year peak. Some of the key trends in the 2016 autocatalyst market highlighted by Johnson Matthey were:

• Euro 6b legislation has compelled automakers to add NOx aftertreatment to the vast majority of European diesel cars. These aftertreatment systems fall into two categories depending on whether they achieve NOx control using a platinum-rich LNT, usually combined with a PGM-coated diesel particulate filter (DPF), or via non-PGM SCR technology in conjunction with a PGM-rich diesel oxidation catalyst (DOC) and a DPF. Demand for both NOx treatment technologies increased during 2016 as automakers complied with Euro 6b. The main reason for higher platinum loadings in 2016 was this increased use of LNTs; these systems typically contain more PGM than Euro 5 systems and are also more highly loaded than Euro 6b systems based on SCR for NOx control.
• North America also saw notable gains in the use of platinum on light-duty diesel catalyst systems last year. Production rose by 7% to an all-time high of around 830,000 vehicles, while platinum demand increased by 8%. The catalyst systems used on US light diesel vehicles have an unusually high average PGM content, because diesel engines are flavored for the largest and heaviest passenger trucks and SUVs.
• In the rest of world, there was a modest decline in platinum consumption on diesel cars. Overall, global demand from the light-duty diesel sector rose by 5% to nearly 2.4 million oz.
• In contrast, other vehicle segments saw stable or reduced platinum consumption last year. Platinum usage on catalysts fitted to non-road mobile machinery saw strong growth in the 2010–2015 period, but was little changed in 2016. In the gasoline sector (including motorcycles), the use of platinum fell by 11% to under 300,000 oz, as Japanese car companies continued to thrift the PGM content of their catalyst systems and replaced some platinum with palladium. Demand for platinum in the heavy-duty sector also dipped, due mainly to a steep drop in demand in North America. US haulage firms scaled back their vehicle purchasing plans in response to lackluster demand for transporting freight, leaving dealers with high inventory levels, and causing truck manufacturers to cut output by 16%.

Global demand for platinum has been at or above 8 million oz for the last four years—this figure includes about 3.3 million oz for autocatalysts—but is unlikely to remain at this level in 2017. While sales to some industrial consumers will remain strong, Johnson Matthey expects consumption of platinum in autocatalysts, jewelery and investment demand to fall this year. Together, these factors are predicted to have a significant impact on world platinum demand, which is forecast to fall by 8% to 7.61 million oz.

Global demand for platinum in autocatalysts is forecast to shrink by 5% to 3.16 million oz in 2017. Most of this decline will occur in the European light-duty diesel sector, as vehicle manufacturers begin to introduce catalyst systems that meet the next stage of European legislation. Known as Euro 6d-TEMP, these new regulations will be phased in from September 2017, and will mandate RDE testing for the first time: NOx emissions measured under real driving conditions must be less than 2.1 times those permitted during the laboratory test cycle used for type approval emissions testing. From January 2020, under the final phase of legislation, Euro 6d, this conformity factor is due to be tightened from 2.1 to 1.5.

The key trends predicted for the 2017 autocatalyst Pt market include:

• For Euro 6d-TEMP, Johnson Matthey expects the European light-duty market to see some shift away from LNTs and towards increased use of SCR (usually in conjunction with a DOC and particulate filter). Since SCR-based catalyst systems tend to have a lower PGM content than those that incorporate LNTs, some short-term decline in PGM loadings can be expected on European diesels. This will be exacerbated by a trend towards combining the SCR and particulate filter on a single non-PGM brick. As a result, the average platinum loadings on European diesel cars are predicted to decline by around 4% this year.
• The impact of falling loadings may be exacerbated by a slight decline in European diesel car production, the first since 2013. The fall in diesel car output is currently expected to be under 2%. However, this decline will be concentrated in the smaller car segments, where the use of LNTs has been most prevalent.
• Looking forward, many car companies have yet to determine their final choice of catalyst systems for the final stage of Euro 6d. However, it is likely that the tighter NOx conformity factor will result in some additional use of NOx adsorbers, in conjunction with SCR technology, as this combination provides effective NOx control across the full range of driving conditions. Additional use of NOx adsorbers would be positive for PGM loadings, but would also add to aftertreatment system costs and may further damage diesel’s competitiveness against gasoline, particularly for smaller vehicles.
• The European heavy-duty diesel sector is also experiencing some catalyst technology changes that will contribute to platinum thrifting this year. Since 2014, all heavy trucks sold in Europe have been equipped with PGM-containing aftertreatment systems to meet Euro VI emissions limits: typically, DOCs and DPFs are used to treat CO, HC and PM, while NOx is treated using SCR technology. The PGM content of these systems is sensitive to the choice of base-metal catalyst used for SCR. First-generation Euro VI systems mainly used Fe-SCR, but as new truck models are introduced and next-generation catalyst systems adopted, some manufacturers are moving to V-SCR. This is facilitating some thrifting of platinum loadings on diesel oxidation catalysts. In Fe-SCR systems, the efficiency of NOx conversion can be maximized by increasing the amount of NO₂ in the exhaust gas stream; this favors the use of platinum, which is a more effective catalyst than palladium for the oxidation of NO to NO₂. However, V-SCR technology does not require the NO to NO₂ ratio to be so tightly controlled, and platinum loadings therefore tend to be lower on these systems. It should be noted that V-SCR is not used in any mainstream light-duty applications, and is not currently approved in North America (except in some non-road applications) or in Japan.
• Demand from the US heavy-duty market should stabilize in 2017 after last year’s steep fall in truck production, but consumption of platinum on US light-duty diesels could decline, a consequence of increased palladium usage in this application. The diesel catalyst technology used on light vehicles sold into the US market differs somewhat from that used in other regions, partly because of vehicle size, but also due to differences in emissions legislation and test cycles. There is relatively little use of LNTs: the vast majority of US diesels are equipped with SCR technology for NOx control, along with PGM catalysts in front of (and sometimes behind) the SCR to control other pollutants. These PGM catalysts are usually heavily-loaded, but palladium takes a greater share of the PGM split than in other regions: the Pt:Pd ratio on US diesels will move close to 1:1 in 2017. This is because US emissions legislation restricts the extent to which automakers can boost the efficiency of the SCR reaction by using platinum to alter the NO to NO₂ ratio in the exhaust gas stream.

The JM PGM Market Report also covers the palladium market. In 2016, the Pd market moved closer to balance—higher Russian supplies and weaker industrial demand reduced the Pd market deficit, despite a 23% rise in demand from Chinese automakers. In 2017, the Pd deficit is predicted to widen. World automotive demand is forecast to exceed 8 million oz for the first time, with further growth in world gasoline car production and tighter emission legislation in China, Europe and North America.

Source: Johnson Matthey