(Mike Maharrey, Money Metals News Service) The world platinum market charted its third significant structural deficit in a row last year, and we should expect these supply shortfalls to continue into the foreseeable future, according to the World Platinum Investment Council (WPIC).
Platinum demand outpaced supply by 995,000 ounces last year. That was 46 percent higher than forecast.
The WPIC expects a market deficit of around 848,000 ounces in 2025.
Last year, total supply rose by 3 percent, but it couldn’t keep pace with surging demand.
Surprisingly, platinum offtake climbed despite a drop in automotive demand. According to the WPIC, the use of platinum in the automotive sector fell by 2 percent to 3.1 million ounces as auto and truck production globally declined by 2 percent and 5 percent, respectively.
Automotive demand makes up around 80 percent of total platinum outtake. But according to WPIC director of research Edward Sterck, auto demand would have to drop by 30 percent to match dwindling supplies.
Meanwhile, platinum jewelry sales grew by 8 percent in 2024, and investment demand took off, rising by 77 percent.
The WPIC forecasts that jewelry demand will reach 2 million ounces this year, an increase of 2 percent year-on-year. It would be the first time consumption exceeds 2 million ounces since 2019.
Platinum mine output grew modestly by 3 percent in 2024, but it is expected to drop by 5 percent in 2025
Above-ground stocks of platinum fell by 23 percent last year, and are expected to drop another 25 percent this year. This represents less than four months of demand.
Recycling has failed to help fill the supply gap as expected.
“Automotive recycling remains extremely weak due to an ongoing shortage of end-of-life catalytic converters, with total recycling at 1,496 koz, only 10 koz higher than the 12-year low seen in 2024,” according to the WPIC Platinum Quarterly report.
Given the current dynamics, platinum may be significantly undervalued.
The current platinum price is hovering around $1,000 an ounce. To put that into perspective, platinum hit an all-time high of $2,213 an ounce in March 2008. This was higher than the record price gold hit in 2011.
Before 2011, platinum was generally more expensive than gold. In 2015, this historical trend reversed with the spread between gold and platinum growing wider.
It remains to be seen whether platinum will regain the price parity with gold we saw before the mid-2010s, but given the supply and demand dynamics, it is reasonable to be bullish on platinum in the near to mid-term. Given the price disparity with gold, this may signal a buying opportunity.
Mike Maharrey is a journalist and market analyst for Money Metals with over a decade of experience in precious metals. He holds a BS in accounting from the University of Kentucky and a BA in journalism from the University of South Florida.
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