Platinum remains significantly undervalued. That is the key takeaway from the 30-page Platinum Quarterly published by the World Platinum Investment Council (WPIC). “Why I say that platinum remains undervalued is that we've got a situation where the opportunities for platinum look good. "Supply is expected to be down by 8% this year. We've had jewellery and industrial very strong, very robust under the circumstances, and automotive particularly strong,” WPIC research director Trevor Raymond told Mining Weekly in a Zoom interview. (Also watch attached Creamer Media video.) “If you look at the automotive demand, despite all the headwinds that we've seen in the global market regarding economic growth and inflation, we've got automotive demand higher than it was in 2019. “That’s largely to do with loadings and some substitution for palladium, so you've got this very interesting supply-demand balance, yet we have a price that remains almost range-bound, and it looks pretty weak”, which Raymond attributed largely to metal that has flowed out of both exchange traded fund (ETF) holdings and exchange stocks, for different reasons. Factors favouring platinum include: platinum lease rates remaining at almost record highs, pointing to a tight physical market; total supply forecast being down 8% in 2022; recycled supply being 20% down year-on-year; a second-quarter surge pointing to China repeating last year’s importation of an extra 1.2-million ounces above identified demand; Europe’s replacing 20-billion cubic meters of natural gas with green hydrogen; new US legislation lifting demand for green hydrogen; both European and US decisions being ideal for platinum-based electrolysers, which adapt better to solar and wind change; and automakers still unlikely to meet demand, despite it being lower on rising inflation and declining economic growth. Mining Weekly: High platinum lease rates have persisted throughout 2022. What does that indicate? Raymond: That's the rub. You’ve got this unusual situation. When we spoke in May, we were forecasting a surplus for 2022 of about 627 000 oz. In today's report, we're forecasting a surplus of nearly a million ounces, 974 000 oz. Yet we've got a lease rate in the market that is ridiculously high. We know that when there's unavailability of platinum in the spot market, more people are forced to lease metal and that puts pressure on the lease rates and in May this year, we saw the lease rate higher than it was even at the peak of the pandemic, when understandably, it was very difficult to get metal. So, we've got this very high lease rate and then a sustained rate, which is still about 4%. That might not sound like a lot, but for the ten, 12 years before Covid, that rate sat at about 0.1% to 0.5% in the market. Obviously, financing costs would be added to that between counterparties but you've got a rate that is four or five times what the historic norm is. The real reason for that is that there's been huge imports of platinum into China. Last year, we saw that China imported an extra 1.2-million ounces above their identified demand. If we project the quarter-two surge, it looks like the same thing will happen, and that will almost entirely absorb the surplus that we're publishing, so it is a bit of a paradox in that you've got an indication that there's tightness in the market, extreme tightness, yet we’re publishing a surplus and I think what it is, is part of that metal going into China certainly is of a speculative nature. People that understand this market, see the point I raised in your first question, the fact that platinum is undervalued. They’re prepare to increase the stock holdings, but we also do believe a lot of that metal is being used either in industrial applications, or certainly in higher loadings on heavy duty trucks, so I think that lease rate does tell a lot about what's currently going on in the market. To what extent are constrained mine and recycled supply adding to platinum suppl...