According to experts at the World Platinum Investment Council (WPIC), the high platinum price is unlikely to affect demand for the precious metal, which is also used in the automotive industry, even after the recent rally. The analysts also do not believe that the sharp rise in prices will lead to an expansion of the platinum supply so quickly.
According to them, the platinum market is comparatively “inelastic”, which means that a change in price only has a relatively small impact on the level of demand for a commodity or service. In other words, the WPIC assumes that consumers will continue to buy approximately the same amount of, for example, such a raw material, even if the price rises or falls.
Currently, an ounce of platinum costs around USD 1,373, after reaching a ten-year high of more than USD 1,420 per ounce at the end of June. This means that the platinum price has clearly broken out of a range between USD 900 and 1,100 per ounce, in which it traded for a long time.
However, as the platinum market is inelastic in the view of the WPIC analysts, they believe it is unlikely that this rally will cause demand for the precious metal to fall significantly, or vice versa, that platinum producers will significantly expand their production. Accordingly, the experts assume that the platinum supply will continue to lag behind demand and that the structural deficit in the platinum market will remain.
Platinum in Deficit Every Year until 2029
This would mean that the platinum market will form a supply deficit for the third year in a row in 2025, which the WPIC estimates at 966,000 ounces. Last year, the deficit was already 992,000 ounces after 896,000 ounces in 2023. And if you believe the forecast of the WPIC experts, the platinum market will be in deficit every year until 2029!
This, in turn, is said to mean that above-ground platinum stocks will run out by 2029. Especially since both the primary supply (mines) and the secondary supply (recycling) continue to face challenges, according to the experts.
However, demand remains robust overall, according to the WPIC. Demand for hybrid vehicles and the slower-than-expected energy transition in the transport sector would support platinum demand from the automotive sector – the precious metal is used in catalytic converters – while at the same time demand for the precious metal as an investment and for jewelry production in China is rising sharply.
And according to WPIC data, changes in the platinum price have not resulted in an immediate change in supply or demand in the past. According to the information, a reaction only occurred with a delay of several years. On the supply side, the inelasticity of platinum is even structurally determined, it was said. Even strong price signals would not accelerate this development.
And historically, platinum demand has also shown only limited volatility in response to short-term price developments. For example, demand from the automotive sector rose by 25% between 2003 and 2008, although the platinum price rose from around USD 600 to approx. USD 2,000 per ounce.
