The World Platinum Investment Council has forecast nearly a million-ounce deficit for the white metal. This marks the third year in a row.
Investors have flocked to the platinum mining stocks, driving the JSE’s precious metals and mining index by more than 17% last week, its biggest weekly gain since October 2023 with Impala Platinum the biggest contributor.
Yet there is a mismatch between share price gains and the actual price of platinum, which has notched up less than 8% so far this year. The market seems to be riding on optimism that the structural deficits will result in a platinum price rally. It may be on to something.
Above ground stocks of platinum have seen a dramatic fall, with 23% drop last year and a further 25% expected this year. To add to the dwindling supply from SA, the world’s largest producer, are weaker recycling efforts and the threat of trade tensions. This imbalance between the scarcity of the metal and its price movement seems to defy the law of economics.
With a meaningful price response, investors’ bet has a long shadow over it. For the Treasury the price rally will boost tax receipts at the time when it is trawling its coffers to fund budget shortfalls and pay down public borrowings.
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