Platinum Market Anticipates Third Consecutive Deficit by 2025: WPIC
The World Platinum Investment Council - WPIC® today released the Platinum Quarterly for Q3 2024, which includes revisions to the 2024 forecast and the first forecast for 2025. Due to the continued strong demand from the previous year, the demand for 2024 reached 247 tons (flat year-on-year) and once again exceeded the restricted supply (226 tons, up 2% year-on-year), with a forecast deficit of 21 tons. It is expected that the market will see a deficit for the third consecutive year in 2025, reaching 17 tons. Total demand remains strong at 245 tons (down 1% year-on-year), but total supply will still be restricted, only increasing by 1% to 228 tons.
Despite a strong performance in Q3 2024 and an improvement in recycling supply, the supply side still faces restrictions.
The supply in Q3 2024 increased by 7% year-on-year to 46 tons (mainly due to an increase in stock releases in South Africa, which kept the quarter's production growth steady), but the global mine supply for the full year of 2024 is essentially flat with last year's restricted level at 177 tons (up 1%, up 2 tons), reflecting the continued challenges faced by the mining industry. Downside risks to production still exist (such as the continued downward trend in the basket price of platinum group metals and the ongoing restructuring process), and could continue into next year. As a result, it is expected that the global platinum mine supply will decrease by 2% (down 4 tons) to 173 tons in 2025.
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The unfavorable factors that have recently plagued global platinum recycling supply may be on the verge of a resolution. Therefore, it is forecast that secondary supply will increase by 3% year-on-year to 49 tons in 2024, and by 12% to 55 tons in 2025, but still below the pre-pandemic 5-year average of 8%. Combined, the total global platinum supply for 2024 is 226 tons (up 2% year-on-year), and 228 tons (up 1% year-on-year) for 2025.
Meanwhile, it is forecast that the above-ground stocks for 2024 will decrease by 16% to 111 tons, slightly above five months of demand, and then decrease by 15% to 94 tons by 2025.
Automotive platinum demand in 2025 will reach an 8-year high
Affected by economic challenges and high interest rates, this year's forecast for automotive production has been revised downward, especially in Europe. As a result, global automotive platinum demand in Q3 2024 decreased by 3% year-on-year (-0.7 tons), and it is expected to decrease by 2% year-on-year (-2 tons) to 99 tons for 2024, including 23 tons of platinum replacing palladium.
Regulatory challenges have further eased, and automakers are adjusting their strategies to encourage the sale of low-carbon hybrid vehicles dominated by internal combustion engines. Therefore, it is forecast that automotive platinum demand will increase by 2% year-on-year to 101 tons in 2025, reaching the highest level since 2017.
The jewelry industry is growing steadily
In Q3 2024, global platinum jewelry demand increased by 7% year-on-year to 15 tons (+1 ton), mainly due to a 68% surge in Indian jewelry production to 2 tons, the second-highest quarterly figure in the WPIC report series since 2013. This increase, coupled with growth in major markets such as Japan and North America, will drive a 5% year-on-year increase in platinum jewelry demand for the full year of 2024 (+3 tons) to 61 tons.
This positive trend is expected to continue into 2025, with demand forecast to grow by 2% (+1 ton) to 62 tons. The Indian market will maintain its growth momentum, North America will continue to rise, and product innovation will also support growth in the Chinese market.
With the slowdown in capacity expansion, industrial platinum demand will decrease by 9% in 2025
In Q3 2024, demand in the industrial sector was strong, increasing by 15% year-on-year (+2 tons). This growth was mainly due to increased demand in the electronics and medical industries (10%), as well as a 96% surge in glass industry usage (despite a low base). The industrial demand for the full year of 2024 will decrease by 1% compared to the previous year, to 76 tons. With the end of China's cyclical capacity expansion, the growth in the electronics industry (+1%, to 3 tons), medical industry (+4%, to 9 tons), hydrogen industry (+123%, to 2 tons), and glass industry (+29%, to 21 tons) will be offset by a 28% decline in the chemical industry.
After three years of exceptional growth, it is expected that industrial demand will decrease by 7 tons to 69 tons in 2025, a decrease of 9%. The main reason for this decline is the reduction in the number of glass industry capacity expansions, leading to a 57% decrease in demand (-12 tons) to 9 tons. However, it is expected that there will be strong growth in the chemical industry (+17%, to 20 tons), petroleum industry (+31%, to 7 tons), medical industry (+4%, to 10 tons), and hydrogen industry (+32%, to 3 tons) in 2025.
It is expected that investment demand will see a net increase for the third consecutive year in 2025
The platinum ETF sell-offs and changes in exchange platinum inventories in Q3 2024 led to a net sell-off of 7 tons for the quarter, marking the first net withdrawal of the year. In 2024, it is expected that demand for large platinum bars (500 grams and above) in China will increase by 17% to 5 tons, with ETF net holdings reaching 5 tons for the year. However, due to the dominant sales situation in the Japanese market and weak demand in North America, global platinum bar and coin demand (excluding large platinum bars in China) decreased by 47% (-5 tons), partially offsetting the above increase, resulting in a net investment demand of only 12 tons for the year.
It is forecast that in 2025, driven by the growth in exchange inventories and an 8% increase in China's demand for large platinum bars (500 grams and above), total investment demand will grow by 7% to 13 tons. Although global investment demand for platinum bars and coins is expected to decrease by 12% to 5 tons, it is expected that demand in North America will recover. It is forecast that some American investors will invest in platinum, expecting higher and longer production of internal combustion engine vehicles, so ETF holdings will also increase by 2 tons.
World Platinum Investment Council CEO Trevor Raymond commented: "Driven by strong demand and continued fragile supply, the platinum market will see an extremely severe shortage for the third consecutive year in 2025. It may be expected that platinum, as an industrial metal, will underperform in today's uncertain global economy. However, as we see in today's research results, even in the current difficult environment, platinum has shown tenacity due to its diverse end uses.
"The core issue is that the supply of platinum from mining and recycling remains tight. In the third quarter, basic mineral supply issues were masked by the release of turnover inventory, and the reduction in mining operations was also hidden. Persistent headwinds bring downside risks to next year's supply, especially as mining companies reassess production plans and restructure their businesses to reduce the negative impact of the basket price of platinum group metals on the sustainability of mining. It is worth noting that plans for supply rationalization will have a short-term negative impact, and will also severely limit any short-term supply response to demand growth or rising platinum prices. At the same time, although we forecast that the recycling supply is recovering to pre-pandemic levels, obstacles still exist, which means that the recycling curve is continuously postponed.
"The continued growth in automotive platinum demand is the driving factor for demand growth in 2025. Contrary to expectations, the slowdown in pure electric vehicle sales has led to a sustained increase in automotive platinum demand over a longer period. At the same time, stricter emission legislation, the growth in hybrid vehicle production including internal combustion engines, and the annual increase in platinum replacing palladium have all boosted platinum demand in the industry.
"In terms of platinum investment, we are pleased to see that Costco, the world's third-largest retailer, has started selling platinum bars and coins, making it easier for American investors to invest in platinum. This has greatly increased awareness of platinum as an investment asset. For many Americans, it also emphasizes the asset planning of precious metals, including platinum, for retirement investment portfolios.
"As emphasized by various initiatives put forward at the recently held COP29 conference, the development and application of green hydrogen remain an important topic on the agenda. The role of platinum in the hydrogen economy is as important as ever. We forecast that in 2025, despite the small base, the demand for hydrogen-related platinum will increase significantly, indicating steady growth in this area. This trend continues to attract the attention of global investors, providing an attractive opportunity for investment in global decarbonization assets.