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Previous research and major issues in the platinum and palladium futures industry
Release time:
06 Sep,2024
In 2024, against the backdrop of a global economic downturn, the precious metals industry performed poorly. To objectively understand the current state of China's precious metals industry and develop solutions to current prominent issues, China Resource Recycling Association Precious Metals Working Committee conducted a comprehensive and in-depth survey of companies across the entire industry chain. Additionally, commissioned by the Guangzhou Futures Exchange, a platinum and palladium market survey was conducted concurrently to provide effective support for the pre-listing preparations, product design, and delivery specifications and guarantees of platinum and palladium futures.
This survey, conducted along eight routes, started on July 10 and has continued for nearly two months, visiting nearly fifty representative companies. The comprehensive survey of the remaining ten companies will be completed before mid-October.
Through the initial visits, the vast majority of surveyed companies expressed great interest in the upcoming listing of platinum and palladium futures products; a few companies remained wait-and-see, while a very small number of companies currently have no plans to participate in futures delivery. This reflects the market's high recognition and expectation of this financial instrument. 。
The survey also found that most refining companies have a high degree of specialization, advanced and highly automated production equipment, advanced processing technology, and high product reliability; some companies' product quality has even reached internationally leading levels. At the same time, companies generally attach importance to the construction of quality management systems, the quality awareness and technical skills of employees have significantly improved, and they value the review and summary of production processes, being able to implement quality management strictly according to standards.
The vast majority of refining companies' recycling and utilization are continuously controlled throughout their entire lifecycle. However, some smaller companies, due to objective reasons such as insufficient systematic quality management, outdated equipment, and weak technical capabilities, have experienced minor fluctuations in product quality.
Industry Prominent Issues are mainly reflected in serious overcapacity, exceeding raw material supply by more than eight times, leading to severe involution in the competition for market share, with companies generally surviving on meager or even no profits.
Affected by the rapid growth of pure electric vehicles and the reduction in the amount of metal coating in automotive catalysts, the consumption of platinum, palladium, and rhodium decreased by nearly 20 tons year-on-year. Although consumption in oil refining and chemical, and fiberglass industries increased, it could not offset the decrease in the automotive sector, resulting in a market situation of continued supply exceeding demand or supply and demand remaining stable, with no significant fluctuations in metal prices in recent months.
The Ministry of Ecology and Environment issued 《 Notice on Further Strengthening the Standardized Environmental Management of Hazardous Waste 》 which explicitly states: Accelerate the cleanup of illegal and unreasonable policies and regulations; do not illegally set up administrative barriers to restrict or prohibit the reasonable inter-provincial or inter-municipal transfer of hazardous waste; do not illegally add hazardous waste management plan reviews; do not illegally delegate the approval authority for inter-provincial transfer and operation of hazardous waste; and do not illegally limit the regional scope or proportion of industrial hazardous waste accepted during the approval process for hazardous waste operation permits, etc. However, in reality, some provinces still restrict the transfer of hazardous waste containing precious metals and other valuable recyclable materials.
Spent three-way catalyst recycling has slowly recovered, but given the low prices and profits, there is no motivation for large-scale collection on the collection end. At the same time, environmental regulations on the collection and recycling ends have not yet been harmonized, and recycling companies still face the risk of environmental penalties.
Reverse invoicing although it solves the problem of input VAT invoices for recycled waste materials from society, it is inapplicable to precious metal categories with extremely high prices and extremely low profits, and requires separate supporting financial and tax policies.
The Fair Competition Review Regulations implemented by the state on August 1, represent a considerable impact on companies that receive local subsidies. How to continue development and adaptation requires a period of integration. In response to the above major industry problems, the China Resource Recycling Association Precious Metals Working Committee will work with enterprises to jointly address them and begin researching solutions.
A small-scale offline meeting will be held in Shanghai after the Mid-Autumn Festival to discuss industry development prospects and countermeasures, as well as to discuss the platinum and palladium futures product plan. ，商讨行业发展前景和应对措施，以及论证铂钯期货产品方案。
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