The platinum market will remain in a deficit this year as a slowdown in the electric-vehicle boom supports demand for autocatalysts, according to the World Platinum Investment Council.

Demand for the metal in the pollution-control devices climbed to the highest since 2017 in the first quarter, and is expected to rise about 2% for the whole year, the WPIC said in a report on Monday. As well as slowing demand growth for EVs — which don’t have catalytic converters — consumption has been aided by stricter emissions rules and using the metal as a substitute for palladium.

“Investors are saying, well actually maybe we’re not going to be all driving Teslas in 2030,” said Edward Sterck, director of research at the council. “So that means more internal combustion engine vehicles, more hybrid vehicles. And so these commodities are looking pretty undervalued.”

Weakness in platinum-group metals in recent years has hurt South African mining companies’ earnings and sparked layoffs. Still, platinum has edged higher in the last few months, rising above sister metal palladium for the first time in half a decade as automakers substituted the metals.

Platinum demand will outstrip supply by 476,000 ounces this year, a second straight annual deficit, according to the WPIC. While platinum-for-palladium substitution is expected to continue, the council cautioned that the trend could reverse in roughly two years given a weaker outlook for palladium.

Here are some other key 2024 platinum figures from the report:

An increase in recycled supply will be offset by a fall in mined production.

Above-ground stockpiles are expected to shrink 12%.

Investment demand is forecast to drop 69% this year as investors pull out of exchange-traded funds amid high interest rates. Still, those flows should return once the Federal Reserve cuts borrowing costs.

“You’ve got constrained supply and you’ve actually got pretty robust demand from both industrial and automotive applications,” Sterck said.