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By Alexander Jones, International Banker
It’s one of the world’s scarcest metals. With many qualities making it highly sought after across such diverse industries as automotive catalytic converters, jewellery, refining, new hydrogen technologies and petrochemicals, platinum has seen its price skyrocket this year, breaking a multi-year trend of range-bound trading. But with weakness projected for the relevant industries that consume the silverish-white precious metal, some question whether platinum has the legs to continue its upward march for much longer.
Indeed, the price of platinum, as represented by the front-month futures contract traded on the New York Mercantile Exchange (NYMEX), has surged this year to July 14 by around 60 percent, as well as by around 40 percent during the first half of the year and a staggering 28 percent in June alone. Platinum’s 2025 performance is even more remarkable when viewed against its track record since 2022, a three-year period in which it remained stuck between around $900 per ounce (/oz) and $1,100 (/oz).
Nonetheless, the market dynamics explaining platinum’s bull run this year could not be any clearer. According to figures from the World Platinum Investment Council (WPIC), 2025 is the third straight year in which the metal has registered a supply deficit of nearly one million troy ounces out of an approximate eight-million-troy-ounce annual market. “The platinum market is in a structural deficit,” Edward Sterck, director of research at WPIC, recently acknowledged to MarketWatch, with 2024’s shortfall of 992,000 ounces being the “deepest” since 2013. Sterck also projected a deficit of 966,000 ounces to materialise this year.
On the supply side, it is the underwhelming performance of South Africa, which represents more than half of the world’s platinum production, that most clearly explains the price surge. According to Novus Group, seven out of twelve mining divisions recorded annual declines in April. “The largest drag was recorded in PGMs, which declined…materially by 24.1 percent year-on-year, shaving off 8.0 percentage points (ppts) from total mining output growth,” the South African intelligence firm’s senior economist, Thanda Sithole, reported on June 12.
“This followed contractions of 24.3 percent and 9.9 percent in February and March, respectively. While earlier declines were largely due to rain-related disruptions, the April drop reflected the impact of breakdowns and third-party supply issues,” Sithole added, highlighting the long-term operational challenges that are leading to lower mining output across much of South Africa’s mining industry.
Declining supply from recycling activities has also restricted the global platinum supply this year. And while above-ground inventories of the metal played a crucial role in plugging the yawning supply gap during the first half of the year, their depleting volumes are estimated to satiate less than four months’ worth of demand, which Sterk recently described as “unsustainably low levels”.
Platinum prices have been further turbocharged by formidable global demand, not least via investors and consumers who have been buying up safe-haven precious metal assets—platinum included—against a backdrop of pronounced market uncertainty stemming from the United States’ widespread imposition of tariffs. China, the world’s single largest platinum consumer, has also imported substantial quantities of platinum thus far this year, while reports have noted that investment demand for platinum increased by a massive 300 percent year-over-year during the first quarter of this year.
With platinum prices currently less than half those of gold, moreover, the white precious metal has become an increasingly attractive proposition for the price-sensitive Chinese consumer market. This trend has been nowhere more clearly observed than in the demand for jewellery, with sky-high gold prices prompting Chinese consumers to opt for the more affordable platinum-jewellery market. “Jewellery fabricators and distributors are trying to save themselves because gold jewellery sales are falling off a cliff. They need to find a new metal for jewellery so that they can survive,” Weibin Deng, the regional head for Asia Pacific at the World Platinum Investment Council, recently told Business Insider. “It cannot be too expensive; otherwise, people wouldn’t buy it.”
Indeed, the WPIC recently forecasted that China’s demand for platinum jewellery would post modest gains after a long-term declining trend that goes back more than a decade, while its platinum-jewellery processing volumes expanded by a mighty 26 percent in the first quarter of 2025. Similarly, shifting demand trends have also emerged for platinum bars and coins, lending further support for the precious metal this year.
All these pertinent factors impacting global supply and demand have meant that, to date, 2025 has been a year of considerable tightness for the platinum spot market. Such tightness was nowhere more clearly shown than in the days leading up to April 2’s notorious Liberation Day, on which US President Donald Trump announced widespread tariffs on imports from countries all across the world. Hundreds of thousands of ounces of platinum were sent to US warehouses during this period to capitalise on a sizeable arbitrage opportunity before the tariffs took effect.
“The market is completely wrong-footed because everybody expected there to be a drag on demand resulting from these tariffs,” Daniel Ghali, a commodity strategist at TD Securities, told Bloomberg. “There’s absolutely no evidence of that as of yet. Instead, what we see is stockpiling in China competing with stockpiling in the US, both driven by different incentives, but both contributing to a depletion in global inventories.”
However, while the first half of the year was undoubtedly a spectacular one for platinum bulls, not everyone remains convinced that the precious metal can repeat the trick during the second half, with analysts already pointing to a combination of emerging factors that could well put a lid on further gains. The evidence certainly seems to imply that the extreme tightness in the global supply of the first six months may well be easing.
According to the International Precious Metals Institute (IPMI), platinum lease rates have declined from their June peak of 22.7 percent to 11.6 percent. “The easing of lease rates is particularly significant as it reflects reduced competition for immediate physical supply—a classic indicator that the most acute phase of a supply shortage may be passing,” the IPMI, a leading trade association for the precious-metals industry, stated in an analysis published on July 4. The report also noted that South African mine supply would show signs of recovery in the second half of 2025, while global platinum mine production is projected to decline by only 6 percent for the full year.
The shape of the forward curve for platinum futures prices can also provide clues as to the relative tightness of the platinum spot market. At present, the curve’s “contango” shape—which means that the front-month contract is trading at a discount to the following-month contract, rather than at a premium (which would instead indicate a “backwardation”-shaped forward curve)—strongly implies that supplies are not necessarily that tight in relation to demand. As such, there does not appear to be much concern over the emergence of a pronounced short-supply scenario.
If platinum’s forward curve is not indicating an extremely short-supply situation, and fund and investment traders are starting to get out of their net-long positions, “what we are seeing could be considered a blow-off top, from a technical point of view,” Darin Newsom, senior market analyst at Barchart, recently explained to MarketWatch—a blow-off top being a sharp rise in an asset’s price followed by a sharp and quick decline.
As was somewhat the case with gold this year, the sheer spike in the platinum price may prove to be the metal’s most bearish factor in the coming months. “Market sources indicate that China’s strong physical platinum demand likely peaked in early June when prices exceeded $1,050 per ounce,” the IPMI analysis also cautioned. “Analysts anticipate June import data (scheduled for release on July 20, 2025) will show declining platinum deliveries following two months of robust imports—a classic example of how high prices eventually suppress demand.”
Regarding the long-term outlook, the WPIC has projected that a significant global supply deficit would persist for at least the next five years. “The platinum investment case remains compelling, with the overriding feature being that the substantial market deficits of 2023 and 2024 are expected to persist throughout our forecast period to 2029f,” the Council noted in a forecast published on June 19. “Inclusive of 2025 forecasts, which are provided by Metals Focus, we expect annual platinum deficits to average 727 koz from 2025f to 2029f, or 9 percent of average demand.”