World Platinum Investment Council (WPIC) has forecast a third consecutive market deficit next year as global demand for the metal, in particular from the automotive industry, remains strong.
Supply constraints are expected to provide a further boost to the market as above-ground stocks, which include mining companies’ inventories, scrap metal and physical platinum products such as bars and coins are further depleted, the council said in its most recent quarterly report published on Tuesday.
The WPIC predicts the deficit will narrow from 682,000oz this year to 539,000oz in 2025 in an environment of continued supply constraints and demand resilience, particularly from the automotive sector, said director of research Edward Sterck.
“Growth in automotive platinum demand had been largely ignored, but its recovery is now being recognised,” Sterck added.
Where many investors had expected the demand for platinum to be eroded by electric vehicles (EVs), sales of such vehicles have slowed, he said. The past few years have seen demand for the metal slump as vehicle makers increasingly favoured battery electric vehicles (BEVs) over internal combustion engines — the primary use for platinum — as the industry stepped up efforts to decarbonise.
However, concerns about the cost of charging infrastructure, potential subsidy reductions in the US and second-hand prices of BEVs led to the sector’s market share growth stalling in the first half of this year. At the same time hybrid vehicles — which use catalytic converters — gained 2%. In China, plug-in hybrids and range-extender EVs outpaced the market share growth of BEVs in 2023 and 2024.
Together with the continued growth in the substitution of platinum for palladium in petrol-fuelled vehicles, that translates into higher-for-longer automotive demand for the metal. Demand is projected to reach an eight-year high next year, exceeding its 2020 low by more than 1-million ounces, the WPIC said.
The outlook for platinum demand is also supported by steady growth in demand from the jewellery sector. The WPIC forecasts a 5% year-on-year increase in 2024 and 2% in 2025, largely thanks to a surge in Indian manufacturing.
That and automotive demand are expected to broadly offset the cyclically weak industrial demand for platinum next year, which is expected to decline by 9% year on year in 2025 but remain above its 10-year average.
In contrast to the resilient demand, platinum supply remains “severely constrained” by the significant reduction in mining output in recent years, even as it increases 2% this year and 1% in 2025.
The WPIC revised its platinum supply estimates higher for this year to reflect a release of work-in-progress inventory in SA but said mine supply is set decline by 2% next year as a result of restructuring in SA and North America implemented in 2024.
“Strong automotive platinum demand and consecutive deficits are stimulating investor interest,” said Sterck.
Platinum investment demand is set to rise 7% to 420,000oz next year. Further growth is also expected in the demand for platinum bars in China. Bolstered by Chinese demand, the WPIC said it expects net positive investment demand for the third consecutive year in 2025.
This year also marks a turning point in the hydrogen economy’s growth, the WPIC said, with hydrogen-related demand for platinum set to double from last year.
Through the commercial development of platinum-containing proton exchange membrane fuel cells, platinum group metals offer hydrogen the potential to eliminate fossil fuels from transport, while their use in electrolysers opens the door for emission-free hydrogen production.
Hydrogen is expected to play a crucial role in the global energy transition. The Hydrogen Council estimates the gas could be responsible for a decline of as much as 20% in global emissions by 2030. As such, hydrogen-linked demand for platinum is expected to increase 10-fold by 2030, contributing 10% of overall demand for the metal.
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