The persistent deficits in the platinum market stem from a combination of supply constraints and rising demand that have been intensifying over recent years. Despite higher prices, platinum supply has struggled to keep pace with growing consumption, creating a notable imbalance.
On the supply side, most of the world’s platinum comes from South Africa, where mining production faces serious challenges. These include ongoing electricity shortages causing frequent power outages (“load shedding”), water scarcity, labor disputes, and aging mining infrastructure. Such issues limit miners’ ability to ramp up output quickly or expand capacity. Additionally, decades of underinvestment during periods when platinum prices were low have left the industry without new mines ready to come online soon. Because developing new mining projects is capital-intensive and time-consuming—often taking 5 to 10 years—the current tightness in supply is unlikely to ease rapidly even if prices remain high.
Recycling usually helps balance precious metal markets by returning material back into circulation when prices rise. However, for platinum this source has been unusually weak lately; recycling volumes have stayed below pre-pandemic levels despite soaring prices. This further reduces available metal on the market.
On the demand side, several factors are pushing consumption higher. Investment demand surged notably after political events such as Donald Trump’s election victory in 2024 triggered increased investor interest in precious metals as safe havens or hedges against uncertainty. In particular, purchases of physical platinum bars and coins along with inflows into exchange-traded funds (ETFs) grew sharply toward late 2024.
Industrial demand remains strong too—especially from automotive manufacturers who use platinum extensively in catalytic converters for gasoline engines—and jewelry sales are rising as well. For example, while gold jewelry sales declined significantly in China due to price spikes early this year, demand for platinum jewelry rose by over a quarter during that same period.
Market behavior also reflects these fundamentals: ETF investors are holding onto their positions rather than selling into rallies as they might during speculative bubbles; warehouse inventories at major exchanges are drawing down instead of building up; all signs point toward genuine physical scarcity rather than just financial speculation driving prices upward.
In essence, what lies behind persistent deficits is a “perfect storm” where constrained mine production meets robust investment and industrial appetite amid limited recycling returns—all combining to keep the market tight and support elevated price levels well beyond typical cycles seen before.[1][3][5]