The platinum market is facing a notable shortage, but the question is whether supply alone is to blame. The reality is more complex, involving several intertwined factors that contribute to this ongoing tightness.
First, mine production has been constrained by multiple challenges. Many of the largest platinum mines are aging and located deep underground, making extraction increasingly difficult and expensive. In South Africa—the world’s dominant producer—mines have cut back output because prices have not justified operating costly deep shafts. Additionally, labor disputes and chronic electricity shortages (load-shedding) further limit mining operations. These issues combined have reduced mine supply by hundreds of thousands of ounces in recent years.
Second, recycled platinum supply has also declined significantly. A major source of recycled metal comes from used autocatalysts in vehicles. However, with the average age of cars increasing—especially in markets like the U.S.—fewer vehicles are being scrapped or recycled each year than before. This behavioral shift means less platinum returns to the market through recycling channels.
On top of these supply-side constraints sits strong demand across various sectors that rely on platinum’s unique properties: automotive catalytic converters for emissions control; industrial uses; jewelry; and growing interest as an investment asset amid rising prices.
This combination creates what experts call a “structural deficit,” where demand consistently outpaces available supply—including above-ground stocks that traditionally cushion shortfalls. These stocks are now at critically low levels relative to demand, leading to elevated lease rates for lending physical metal temporarily—a sign that market tightness is real and persistent.
Trade barriers or tariffs could potentially dampen some demand growth but are unlikely to reverse this fundamental imbalance given how large the deficit has become globally.
In summary, while limited mine output plays a crucial role in creating today’s platinum shortage, it cannot be viewed in isolation from declining recycling flows and sustained robust demand across multiple industries. The shortage reflects a structural issue rooted both in constrained supply sources and evolving consumption patterns rather than just one single cause like mining production alone.