Global Platinum Supply Set to Decline Amid Continued Restructuring
The World Platinum Investment Council (WPIC) has forecast a two percent decline in mined platinum supply for 2025, as producers continue to restructure operations in response to challenging market conditions. In its third-quarter supply and demand report, WPIC projected a third consecutive annual supply deficit for the metal in 2025. Newly mined platinum production is expected to remain flat this year, at approximately 5.68 million ounces, but decrease to about 5.55 million ounces next year.
While the third quarter of 2024 saw a seven percent increase in production to 1.48 million ounces, the WPIC clarified that this increase was largely due to the release of mining company inventories rather than new extraction. Trevor Raymond, CEO of WPIC, highlighted the downside risks facing platinum supply next year, citing "ongoing headwinds" and the negative impact of platinum group metals' basket price on mining sustainability as reasons for the reduced output.
Despite the anticipated decrease in supply, automotive platinum demand is forecast to grow by two percent in 2025, reaching 3.25 million ounces – the highest level since 2017. This projected increase in demand contributes to WPIC's forecasted supply deficit of 539,000 ounces for 2025, the council's first official estimate for that year.
Supply from platinum recycling is anticipated to rise by one percent next year, alongside steady improvements in jewelry demand. However, industrial demand for platinum is expected to decrease in 2025. In contrast, investment demand – including bars, coins, and exchange-traded funds (ETFs) backed by physical metal – is projected to see a significant increase, growing by seven percent to 420,000 ounces.
Raymond noted that contrary to previous expectations, the slowdown in battery electric vehicle (BEV) sales would contribute to sustained automotive demand for platinum. He also pointed out that stricter emissions regulations, growth in hybrid vehicles equipped with internal combustion engines, and increased substitution of palladium with platinum in catalytic converters are all factors bolstering platinum demand in the automotive sector.
The production outlook for platinum remains complex, with Sibanye-Stillwater recently announcing significant cuts to palladium and platinum production at its Stillwater facilities in the US. Other producers, including Impala Platinum and Northam Platinum, have also made smaller adjustments, but both companies stated that substantial cuts were not feasible due to the need to protect cost structures. As a result, significant new production of platinum is unlikely in the near future.
Platinum prices have remained largely flat over the past three months, while the palladium price has gained about six percent during the same period. Year-to-date, platinum prices are down by two percent. Despite the recent downturn, analysts believe that the platinum group metals' basket price may have bottomed out, with expectations for a recovery in the coming months.
