Platinum supply and demand explained
Platinum is a rare metal used both as an industrial material and as an investment asset, and its price is set by how much of the metal is produced, reused and wanted by industry and investors[1]. WPIC, the World Platinum Investment Council, reports that the market has been running in deficit in recent years because demand has outpaced available supply[1][2]. This structural tightness has been a main driver of rising platinum prices in 2024 and 2025[3].
Where platinum comes from
Most mined platinum is produced in a small number of countries, with South Africa supplying the largest share and Russia historically the second largest[4]. Because production is concentrated, operational problems, power constraints, labor issues and limited investment in new mine capacity in those regions can quickly cut global output and tighten the market[4]. WPIC forecasts showed mine supply falling in 2025 compared with prior years as producers were unable to repeat earlier inventory drawdowns[1].
Secondary supply: recycling and stocks
Recycling of platinum from spent autocatalysts, electronics and jewelry is an important source of supply and tends to rise when prices are higher[1][3]. Exchange inventories and other stocks also play a balancing role: large inflows to exchange-traded products (ETFs) or releases from exchange warehouses can tighten or loosen the spot market depending on the direction of flows[2][5].
Main areas of demand
– Automotive catalysts: Historically the largest industrial use, platinum is used in catalytic converters for diesel and for substituting palladium in gasoline converters when economics favor platinum[3]. The growth of electric vehicles reduces demand from traditional auto catalysts over time, but substitution and regulatory shifts can sustain or change demand patterns[3].
– Jewelry: Cultural and fashion trends, especially in markets such as China and India, affect jewelry demand[3].
– Industrial uses: Chemical catalysts (for example in fertilizer and petroleum refining), glass production, and various specialized industrial applications consume platinum.
– Investment: Bars, coins and ETFs form a sometimes-large and volatile component of demand. Investor flows into ETFs and physical holdings pushed demand markedly higher in 2024 and contributed substantially to the market deficit[2][5].
Why deficits have appeared recently
Multiple factors combined to create multi-year deficits: constrained mine output in major producing regions, rising investment demand, and weaker recycling in some periods[1][2][4]. Geopolitical events and China policy moves also altered flows; China reclassifying platinum as a strategic mineral and launching domestic futures created additional institutional demand and physical inventory needs[4].
How markets can shift toward surplus
A few mechanisms can flip the market from deficit to surplus. Higher prices tend to incentivize more recycling and can bring held metal from ETFs or warehouses back to the market through sales or outflows[1][5]. WPIC’s scenarios for 2026 show a much smaller balance or even a modest surplus driven largely by anticipated reductions in investment demand and increased recycling[1][5]. Conversely, continued production constraints or stronger industrial uptake could maintain deficits.
Longer term demand drivers
– Energy transition and hydrogen: Platinum is a key catalyst in certain electrolyzers and fuel cells; growth in hydrogen production and fuel cell deployment could become a major source of demand over time[3][4].
– Automotive technology mix: The speed and scale of the shift to battery electric vehicles versus hybrids and hydrogen fuel cells will determine how quickly traditional catalytic demand declines and whether new uses emerge.
– Policy and strategic stockbuilding: Government decisions, strategic inventories and commodity market infrastructure (new futures or ETF products) change how much metal sits in financial storage versus industrial use[4][5].
Price sensitivity and volatility
Platinum is sensitive to both narrow physical developments and broader financial market moves. Because annual supply and demand totals are relatively small (millions of ounces), changes in investor flows, mining disruptions, or sudden swings in recycling can cause outsized price moves[1][2][3]. Correlations with gold and other commodity rallies can amplify price trends[3].
Practical implications for users and investors
– Industrial consumers need to manage supply risk through long-term contracts, recycling programs and material substitution where feasible.
– Investors should expect periods of strong volatility driven by sentiment and visible inventory changes; ETF holdings and exchange stocks can shift market balances quickly[2][5].
– Policymakers and project developers face a trade-off: limited recent investment in new mining capacity keeps supply tight, but environmental and permitting constraints make rapid production increases unlikely[4].
Sources
https://platinuminvestment.com/files/954835/WPIC_Platinum_Quarterly_Q3_2025.pdf
https://investingnews.com/wpic-platinum-market-forecast/
https://www.interactivebrokers.com/campus/traders-insight/securities/commodities/why-a-structural-deficit-and-hydrogen-economy-could-boost-platinum/
https://www.streetwisereports.com/article/2025/12/15/platinums-impressive-ascent-could-continue-through-2026.html
https://www.morningstar.com/news/dow-jones/202511196183/platinum-market-forecast-to-recover-with-small-supply-surplus-expected-in-2026-commodities-roundup