Global Platinum Shortage Explained
Platinum is in a deep shortfall because mine output has stalled while demand from several directions has risen and physical metal has been pulled into inventories, creating tight regional markets and high borrowing costs for the metal[1][2].
Supply is concentrated in a few places, especially South Africa, where limited investment and operational disruptions have constrained mine production and made the market vulnerable to supply shocks[1][3].
On the demand side, stronger investment flows, growth in China’s physical trading and futures, and industrial uses such as autocatalysts and emerging hydrogen applications have together raised consumption or hoarded available metal, amplifying the deficit[2][3][1].
Why supply is weak
– Concentrated production. South Africa supplies roughly 70 percent of mined platinum, so strikes, power problems, or underinvestment there have an outsized effect on global supply[1][3].
– Low expansion capital. Producers have not added much new mining capacity in recent years, limiting the ability of supply to respond quickly to higher prices[1].
– Recycling and secondary supply remain insufficient to close the gap quickly; although recycling is rising, it will take time to supply substantial ounces from scrapped vehicles and other sources[1].
Why demand has outpaced available metal
– Automotive demand and emissions controls keep platinum and other PGMs integral to catalytic converters, while tighter environmental rules in some regions support longer-term usage[1].
– Investment appetite surged in 2025, with funds and physical buyers pushing prices higher and drawing metal into warehouses and away from traditional trading hubs[2][3].
– China’s new physically settled futures and increased exports to China have increased physical demand and pulled metal into that market, creating a three way geographic tug of war among the US, Europe (London), and China[3][2].
– Emerging industrial demand — including potential hydrogen fuel applications where platinum is a key catalyst — adds another layer of structural demand that could persist into the medium term[1].
How market mechanics make the shortage worse
– High lease and borrowing rates. The cost to borrow physical platinum in London rose sharply, signaling traders are reluctant to lend metal and that prompt availability is scarce[2].
– Geographic dislocations. Large volumes sitting in US warehouses and rising Chinese physical engagement have left London short and raised backwardation in some markets, meaning near-term supply is more valuable than future delivery[3].
– Short-term investment flows can exacerbate deficits: when investors buy and store metal, they remove it from circulation that would otherwise satisfy industrial or jewelry demand[2][4].
Outlook and possible easing factors
– Recycling growth. Increased recovery from scrapped vehicles and catalytic converters will add supply over coming years and can materially reduce the deficit if collection and refining ramp up[1].
– Potential policy or trade developments. If tariff fears ease or trade frictions decline, some of the arbitrage and stock-building behavior could unwind and relieve regional tightness[4][2].
– Market balance may improve gradually: some analysts expect the large 2025 deficit to shrink over time as recycling and reallocation of aboveground stocks occur, though structural issues could keep the market tighter for several years[1][4][7].
Wider consequences
– Price volatility and new highs. Tightness and strong investment flows pushed platinum to multiyear highs in 2025, creating ripple effects for manufacturers that lease or buy metal and for industries where platinum is a critical input[2][6].
– Substitution and innovation. Persistently high prices can accelerate substitution (where possible), greater efficiency in platinum use, and more recycling and reuse technologies[1][5].
– Strategic stockpiling and geographic competition. Countries and large traders may continue to accumulate physical holdings, keeping regional shortages in place until inventories are redistributed or increased supply arrives[3][2].
Sources
https://www.interactivebrokers.com/campus/traders-insight/securities/commodities/why-a-structural-deficit-and-hydrogen-economy-could-boost-platinum/
https://us.fashionnetwork.com/news/Platinum-hits-17-year-high-as-tight-supply-doubles-price-in-2025,1792944.html
https://www.ipmi.org/news/platinums-80-surge-3-hidden-forces-driving-it
https://www.prnewswire.com/news-releases/platinum-market-to-end-2025-with-692-koz-deficit-potential-easing-of-tariff-fears-leads-to-a-more-balanced-platinum-market-in-2026-302619223.html
https://goldinvest.de/en/platinum-price-soaring-why-the-wpic-sees-little-relief/
https://nai500.com/blog/2025/11/platinum-prices-hit-15-year-high-what-are-the-driving-forces/
https://www.kitco.com/news/article/2025-11-19/balanced-platinum-market-2026-wont-fix-fundamental-long-term-issues-wpic