Platinum is scarce because most of the world’s supply comes from a few difficult mines, production has been constrained by technical and political problems, recycling and new mine investment are limited, and recent demand shifts have pulled physical metal into tight hands[1][6].
Essential context and supporting details
– Geographic concentration and geology make production fragile. South Africa dominates platinum mining, supplying roughly 70 to 80 percent of mined platinum, while Russia is the second largest producer; this heavy concentration means disruptions in a single region move global supply markedly[1][7][6].
– Operational challenges at existing mines reduce output. South African operations face declining ore grades, aging shafts, rising costs, chronic power shortages, and periodic labor disruptions, all of which lower mine availability and raise the cost of expanding production[1][4][6].
– Underinvestment in new capacity. Extended periods of low prices discouraged investment in greenfield projects and mine expansions, so there is little new capacity ready to replace depleting or idled mines, creating a structural shortfall versus demand[6][4].
– Geopolitical and trade risks squeeze flows. Sanctions and geopolitical tensions affecting Russian supply and changing trade patterns (including shifts in where physical metal is held) reduce the effective availability of metal in traditional trading centers[2][3].
– Recycling has limited elasticity. Platinum recovery from end-of-life products and industrial scrap is technically possible but not sufficiently scalable in the short term to offset mine shortfalls; recycling increases are expected but unlikely to erase the deficit immediately[2][3].
– Increasing and shifting demand tightens physical inventories. Industrial demand (notably for autocatalysts, chemicals, and growing hydrogen-related uses) combined with China’s strategic moves—classification of platinum as a critical mineral and the introduction of physically settled platinum futures on Chinese exchanges—have increased physical demand and required more on-hand metal, drawing inventory into China and the United States and away from traditional hubs[6][3][7].
– Above-ground stocks have been drawn down. Several consecutive years of market deficits have consumed above-ground inventory buffers, making the market more sensitive to even small disruptions in mine supply or shifts in consumer stockholding behavior[1][7].
– Market structure and pricing feedback. Tight prompt availability has produced strong backwardation in some OTC forward curves, signaling immediate scarcity and encouraging further inventory hoarding by consumers and traders, which amplifies perceived and real shortages[7][3].
Implications and how these factors interact
– A regional problem becomes global. Because so much metal originates in a small number of locations, local issues—power cuts, strikes, shaft closures—translate into global deficits quickly[1][4].
– Supply recovery is slow. Even if prices rise, bringing new investment takes years because permitting, development, and construction of mines are long-lead activities; existing mines also need sustained capital to reverse declines in ore grade and productivity[6][4].
– Demand-side changes can outpace supply responses. New industrial uses and policy-driven stockpiling (for strategic or trading reasons) can tighten physical markets faster than recycling or mine expansions can respond[6][2].
– Vulnerability to shocks remains high. Depleted above-ground inventories and concentrated production mean that future shortfalls or political events could produce sharp price and availability swings[1][7].
Sources
https://www.leadlagreport.com/p/platinums-perfect-storm-why-select
https://www.streetwisereports.com/article/2025/12/15/platinums-impressive-ascent-could-continue-through-2026.html
https://deriv.com/blog/posts/why-metals-are-surging-fed-uncertainty
https://gerrardsbullion.com/invest/2026-platinum-predictions-will-tight-supply-keep-prices-high/
https://www.cruxinvestor.com/posts/chinas-strategic-critical-mineral-classification-of-platinum-its-investment-implications-for-global-pgm-supply-pricing-and-emerging-developers
https://www.ipmi.org/news/platinums-80-surge-3-hidden-forces-driving-it
https://www.kitco.com/news/article/2025-11-19/balanced-platinum-market-2026-wont-fix-fundamental-long-term-issues-wpic