Corona Virous Market Reset & The Precious Metals Markets

---

Precious Metals Industrial Demand
Automotive Demand – Virus has significantly impacted Jan-Feb demand

• Emission Control Catalyst Materials
  • Palladium loadings in auto catalyst remain elevated versus previous years.  Latest emissions standards in EU, China and US are driving higher loadings.
  • Diesel-Gate Responses
    • New RDE real world emission test conditions, which came in response to diesel-gate, are also driving higher loadings.
    • Hybrids carry higher loadings than ICE vehicles.  Hybrids are displacing LDV diesel vehicle demand in the EU.
• Automotive Electronics – drives Ag, Au, Pt, Pd, Rh, Ir demand in electronics
• Automotive Electrification (Hybrids, PHEV’s, BEV’s and FCEV’s) all carry higher levels of electronics and corresponding precious metals

Petroleum and Gas Catalyst Materials Markets – strong
Chemicals catalyst markets (EO, PX, Silicone, etc.) -  strong, China disruptions
Chlor-Alkali catalyst markets – strong, China disruptions 
Semiconductor and Electronics –

• Q1 China production certainly impacted, but year end surge still possible to help offset losses. 
  
• TSMC and other non-China foundry surge will help mitigate global risks.  Semi clean room garments help mitigate risk of virus spready.  Design thrifting occurring in MLCC’s and Resistors.

Be prepared for the PM’s to resume climb

• Gold:  Upside for Gold if Virus expands further and disrupts markets.
  • Monetary and QE policies all encouraging higher gold
• Silver:  Gold to Silver Ratio at record high levels.  Silver is due for a market tug higher.
  • Benefiting from Automotive Electronics content increases and electrification.
• Platinum:  Beat down hard (-11%) last week, may not recover as much as the others. 
  
  • Industrial demand is still modest, and investment demand has been key to holding 2019 levels.  Industrial demand is secure, but investment demand may not recover.
• Palladium: Structural deficit remains, and virus can lower annual deficit, but not likely eliminate it. 
  
  • Prices should resume climb. 
    
  • Increases in mining for Pd from Russia, N. America, and Zimbabwe are coming. 
    
  • Increased “baked in” higher Pd loadings in autocatalysts recycle will return more Pd recycle to meet demand as well.
• Rhodium:  Quoting DiNero – Forget About It.  No hope of rescue.
  
  • OEM auto-catalyst design changes needed to alter this explosion in price.  In the Pd/Rh Thelma and Louise analogy, Thelma may survive long term, but Louise … Nope
• Iridium:  Strong Industrical Demand
  
  • Ir Crucible markets (SAW Filters and Saphire LED) both climbing.
    
  • Chlor Alkali industries will continue to hold this precious metals at record levels.
    
  • OLED IrCl compound demand is also climbing.
    
  • Hydrogen Generation is a further demand risk for this segment.  
    
  • Look for a further 20-40% climb by year end.
• Ruthenium:  Surge in production from Furuya Japan.
  
  • Ru recent price decline aligns with Furuya Metals Japan massive Ru secondary refine to 60mt/year. 
    
  • This 1.9Moz refine capacity is fully utilized running PGM concentrate from Lonmin (now Sibanye) S. African operations. 
    
  • Look for tightness is supply to begin to occur as Chlor-Alkali and Hydrogen Electrolysis segments expand. 
    
  • Large risk from Semiconductor fab’s for Ruthenium wiring sub 5nm node (starting ~2025).