Months into a staggering price rally, platinum’s market dynamics still present an attractive investment case, according to a report by the World Platinum Investment Council (WPIC) this week.
The report estimates that platinum will remain in a significant market deficit of 850,000oz this year, its third consecutive year of supply falling short of demand, leaving room for prices to increase further in the coming months.
Global mining supply of the metal is expected to decline by 6% year on year in 2025. Having slashed production last year, platinum group metals (PGM) miners can scarcely afford further production cuts.
“Producers will not be able to repeat the drawdown of work-in-progress inventory we saw in 2024,” said the WPIC. Last year, the local PGM sector shed nearly 10,000 jobs as miners cut costs after two years of stubbornly low prices.
The WPIC also highlighted elevated lease rates — the cost of temporarily borrowing metal in times of market tightness. These rates have remained elevated in recent months, suggesting that soaring platinum prices have done little to offset the deficit.
In the three months to end-June, platinum prices rose 36% as two years of consecutive deficits worked their way into the market.
Platinum’s price rally over this period was accelerated by trade wars and geopolitical uncertainty, with global superpowers anxious to secure their supplies of the precious metal.
Security of supply appears to be a key theme that is emerging, and with platinum forecast to remain in deficit, competition for the metal will be high.
— World Platinum Investment Council
The metal’s role in hybrid cars, renewables and military technology makes it highly strategically significant and, as a store of value, platinum also enjoys some safe-haven demand when financial markets are in turmoil.
“Security of supply appears to be a key theme that is emerging, and with platinum forecast to remain in deficit, competition for the metal will be high,” said the WPIC.
Demand for the metal has been largely unshaken by geopolitical noise, with tariff-related uncertainty resulting in only a 3% forecast decline in motor vehicle demand this year.
“Alleviating the sustained tightness [in platinum markets] may require still higher platinum pricing to bring more metal out of above ground stocks,” said WPIC research director Edward Sterck.
The report paints a rosy picture for SA’s PGM miners, some of whom have doubled in value this year on soaring prices. Northam Platinum, for instance, has gained 135% since December, taking its market cap above R90bn.
Valterra Platinum is up more than 70% year to date, with soaring prices helping to smooth investors over as the former Anglo American subsidiary navigates a new structure and a secondary listing on the London Stock Exchange.
Impala Platinum, having gained 112% this year, last month declared a surprise final dividend in a move that signals confidence in the PGM price outlook.
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