Platinum market supply has become increasingly tight in recent days! According to media reports, fears of tariffs imposed by the US government and speculative purchases have led to the precious metal being withdrawn from key markets like London and Zurich and instead transferred to warehouses in the US and China.
While the price of the precious metal, which is also primarily used in the automotive industry, has marginally retreated from its high, it is still up by around 52% since the beginning of the year! Furthermore, the implicit cost of borrowing the metal for one month has reached its highest level since data collection began in 2002. The inflow of platinum into facilities associated with the New York Mercantile Exchange reached its second-highest level on record last Thursday.
US President Donald Trump’s erratic tariff policy led some time ago to over half a million ounces of platinum being transferred to US warehouses to profit from the resulting strong prices. A similar situation was previously observed in the copper market.
China Imports 36 Tons of Platinum in Q2 Alone
Exact figures on how low platinum inventories truly are in London and Zurich are unavailable, but supplies were further depleted by Beijing importing 36 tons of platinum in the second quarter alone – a record.
Given the platinum price rally and the unusual scarcity in the leading spot market, London, the monthly borrowing costs for platinum have risen to almost 40% on an annualized basis. Usually, this value is closer to zero…
Despite the recent pullback in platinum prices, experts see little indication that market scarcity will ease. The price structure known as backwardation – where buyers pay more for shorter-term deliveries than for longer-term contracts to secure supply – has deepened further this month, according to reports. Backwardation is now deeper and more widespread along the curve than in the past 20 years.
Inventories in American warehouses began to decline in April after platinum was exempted from Washington’s initial tariffs. This brought US prices closer to those in London and Zurich. However, US premiums rose again after US President Trump suddenly announced a 50% tariff on copper. Although platinum remains unaffected, experts stated that the copper tariff significantly increased the tariff risk for the precious metal.
Besides being an investment vehicle, platinum is also used in catalysts and laboratory equipment. The World Platinum Investment Council estimates the deficit for 2025 at almost 1 million ounces, further reducing dwindling above-ground inventories.
