Platinum is currently experiencing a significant supply deficit that has persisted for three years in a row, raising questions about whether this is just a short-term spike or a deeper structural problem. The numbers tell an important story: the market is expected to face a deficit of nearly one million ounces in 2025 alone, which represents about 12% of global demand. This ongoing shortfall threatens to drain existing above-ground inventories within the next two to three years if the trend continues.
The root causes of this shortage are largely structural rather than temporary. South Africa, which produces around 80% of the world’s platinum, has been grappling with serious production challenges. These include energy crises leading to rolling blackouts and other operational disruptions that have constrained mining output. Additionally, there are no major new mines coming online soon enough to offset these losses or meet rising demand.
On the demand side, platinum is seeing growth across several sectors—automotive (especially catalytic converters), jewelry (notably in China), industrial applications, and investment interest. While electric vehicle adoption might slow some traditional automotive uses for platinum due to their different catalyst needs compared with internal combustion engines, investor interest and jewelry demand continue pushing consumption higher.
Historically, despite these deficits since 2023 and shrinking stockpiles that once buffered supply gaps, platinum prices remained relatively subdued until recently breaking above $1,200 per ounce—the highest level since mid-2021. This suggests that markets had been relying on inventory reserves but those buffers are now rapidly depleting.
Given these factors—a persistent multi-year supply deficit driven by production constraints primarily in South Africa combined with robust multi-sector demand growth—it appears that platinum’s current shortage reflects more than just a short-term spike. Instead, it points toward an emerging structural issue likely to sustain upward price pressure unless new sources of supply materialize or demand patterns shift significantly.
In essence, investors and industry watchers should prepare for continued volatility but also recognize that platinum may be approaching a critical tipping point where its scarcity becomes more pronounced and prices adjust accordingly over the medium term.