Platinum’s rise in the market is being strongly supported by solid fundamentals that reflect a tight balance between supply and demand. One of the main reasons for this upward trend is a persistent **supply deficit**. The global platinum market has been running annual deficits for several years now, with forecasts showing these shortages continuing well into the late 2020s. This means more platinum is being consumed than produced, steadily drawing down above-ground stocks.
A key factor behind this supply crunch is that **production from South Africa**, which accounts for about 80% of global output, is declining. Challenges such as labor disputes and aging mines are causing production to drop—new output was expected to fall by around 6% in 2025 alone. Additionally, recycling of platinum, which used to help ease supply pressures, has decreased significantly and remains near historic lows.
On the demand side, several forces are driving growth or sustaining strong consumption levels. Platinum remains essential in automotive catalytic converters used in internal combustion engines to reduce emissions. Despite the rise of electric vehicles (EVs), many automakers have not yet fully shifted away from using platinum group metals due to cost considerations and regulatory requirements.
China plays an increasingly important role here; its imports of platinum surged by about 50% recently as its luxury car market rebounds strongly after previous slowdowns. Beyond cars, industrial uses like hydrogen fuel cells are expanding markets for platinum because it acts as a critical catalyst in these clean energy technologies.
Jewelry demand also contributes notably—especially across Asian markets where platinum enjoys cultural appeal—and investment interest has picked up sharply too. Investors looking beyond gold have turned toward white metals like platinum amid economic uncertainties and shifting currency dynamics worldwide.
Another sign pointing to physical scarcity is how lease rates on physical platinum have spiked dramatically compared with other precious metals like gold—indicating tight availability among traders who borrow metal for delivery or hedging purposes.
All these factors combined create a compelling environment supporting higher prices: constrained supply unable to keep pace with steady or growing demand across multiple sectors ensures that market fundamentals favor continued strength in platinum’s value over coming years without relying on speculative bubbles or short-term trends alone.