Demand for platinum is set to total 7.9Moz in 2021, resulting in a market deficit of 60,000oz.
The figure is a marked improvement on the record 1Moz deficit seen in 2020, driven by a 20% drop in supply due to COVID-19-related mine closures, outages at Anglo American platinum converter plant phase A and less recycling of the metal.
However, the report also cited "risks" to supply from South African potential electricity supply disruptions from power supplier Eskom.
There could major road bumps ahead for future platinum demand with the advent of electric vehicles, Simon Jowitt, assistant professor of economic geology at the University of Nevada, told a PDAC virtual summit this week.
"The development of hybrid and EVs could hit demand for catalytic converters. It is already affecting platinum demand due to the decline in diesel-powered cars, although [the trend] could be offset by nascent technology like solid oxide fuel cells," he said. SOFC's often use platinum catalysts.
Variations in the price of platinum last year "could suggest [its] decline and the rise in palladium is likely to continue", he said.
The price of platinum has soared of late and is currently trading at US$1,223/oz - marking a multi-year high for the precious metal, which plunged to $600/oz a year ago.
The WPIC report showed the impact of the supply drop in 2020 was cushioned by a 7% drop in demand, although this was offset by a higher pandemic-induced investment in platinum.
"In 2020, weakness in automotive, jewellery and industrial demand was partly offset by strong investment demand, from bars and coins and ETFs, collectively up 24% (plus-295,000oz) year-on-year," said the World Platinum Investment Council Q4 report.
"Heightened global risk drove investor demand for hard assets such as platinum during the first half of the year, further encouraged by the weak platinum price."
Platinum ETF holdings rose among investors in North America, Europe and Japan although they tapered off in South Africa.
The platinum market posted a deficit in of 170,000oz in the December quarter as demand for industrial, jewellery-related products and investors continued to take hold.