According to the World Platinum Investment Council (WPIC), platinum supply continues to lag behind demand, leading to a structural deficit in the platinum market. A deficit of 966,000 ounces is expected for this year. The experts see this as a compelling investment argument for the precious metal, among other reasons.
Especially since the WPIC expects the supply from mine production to fall to its lowest level in years. As the analysts explained, platinum producers spent 2024 primarily restructuring their assets and reducing investment expenditures, following a period of low prices for platinum group metals. Additionally, the volume of metal recovered from recycling has not yet returned to historical levels.
Potential for Stronger Demand Growth in Platinum
At the same time, according to the WPIC, demand for the precious metal remains relatively robust. While a 4% decline compared to the previous year is expected this time, this is mainly due to cyclicality in the glass industry. This year, the WPIC says, significantly fewer new glass production facilities will be commissioned. This is expected to lead to a 58% year-on-year decrease in platinum demand from the glass sector, from 690,000 to 289,000 ounces.
According to the WPIC, both supply and demand in the platinum market are relatively “inelastic”, meaning that it is unlikely that the volume on both sides will fluctuate when the price changes – at least in the short term. The experts believe this presents an attractive investment opportunity.
Moreover, there is potential for stronger demand growth than previously assumed by the WPIC. The chance for this is seen primarily in the areas of investment and jewelry demand.
Additionally, while the analysts continue to assume that the electrification of drive systems will progress and thus slowly reduce platinum demand, they now expect this trend to slow down. This would mean that demand from the automotive sector is likely to remain higher for longer than previously expected – despite the uncertain economic outlook. An increase is particularly expected due to demand for hybrid vehicles.
Structural Platinum Deficit Deeply Rooted
The WPIC also believes that the structural deficit in the platinum market is deeply rooted and continues to deplete above-ground inventories. By the end of this year, these are expected to be at just under three months of demand, which is an unsustainably low level.
Furthermore, it is advantageous that the unique properties of the precious metal are needed in a range of diverse industries and end markets. This helps to limit the negative effects of trade barriers and their negative impact on global economic output. Consequently, according to the WPIC, the influence of tariff policies on demand development in 2025 is less than one might think.
Economic risks and risks related to global trade disputes could therefore suppress platinum demand, but a scenario that could lead to a significant reduction in the supply deficit in the platinum market is difficult to imagine, the experts explained.
Compelling Investment Argument for Platinum
One would actually have to assume that a market deficit would lead to a price increase, which in turn would ensure that new supply comes to the market. However, this is hardly the case with platinum, at least in the short term, so the market can remain in imbalance – and thus the price elevated – for extended periods.
The WPIC’s thesis is also that the increasing awareness of the strong supply/demand fundamentals and the resulting structural deficit support the compelling investment argument for platinum. Moreover, the analysts continue, this argument is underpinned by the robust and diversified demand drivers for the metal, as well as the emergence of new demand drivers due to the use of the precious metal in technologies for using hydrogen in the energy transition. Finally, the significant discount of the platinum price to the gold price and the significant undervaluation compared to historical platinum price development provide an interesting investment opportunity, according to the WPIC.
