The Resurgence of Platinum and Its Growing Demand
Cole Morace
President at Quest Alloys & Metals. Offering competitive prices and swift payments for various high-temp alloy scrap; mixed metal scrap; e-waste; gas turbine scrap; aerospace and aviation scrap; Ni/Ti/Ge/Ga/In/Ta
Historically, platinum commanded a premium, reaching an all-time high of $2,276 per ounce in March 2008. This reflected a period when it was significantly more expensive than palladium. However, over the past decade, platinum's price experienced a multi-year decline, falling below $800 per ounce by 2018, nearing its lowest level in a decade. For much of this period, platinum traded in a consolidation range around the $1,000 per ounce pivot point. While it achieved a higher low following the pandemic-inspired $562 bottom in 2020, it has consistently made lower highs since its 2021 peak of $1,348.20.
The automotive industry has traditionally been platinum's largest consumer, primarily for catalytic converters that reduce harmful emissions. Platinum was particularly favored in diesel vehicles due to its superior performance in their lower operating temperatures and leaner air/fuel streams. However, the "Dieselgate" scandal, which emerged in September 2015, severely damaged public perception of diesel vehicles and led to increased restrictions, particularly in Europe and Japan. This resulted in a significant reduction in the market share of diesel vehicles, directly impacting platinum demand from this crucial sector.
The "Dieselgate" scandal was not merely a demand shock but a powerful catalyst that accelerated pre-existing market trends, fundamentally altering the competitive landscape between platinum and palladium. Even before Dieselgate, palladium was gaining traction as a cheaper alternative for gasoline-powered vehicles. The reduction in fuel sulfur content further enabled the use of palladium in some diesel autocatalysts, where it had previously been less feasible. This combination created a perfect storm, leading to a rapid and significant price inversion. By 2012, approximately 800,000 ounces per annum of the then-cheaper palladium had replaced platinum in diesel autocatalysis. Since 2017, palladium's price has consistently exceeded platinum's, reaching a premium of over $1,500 per ounce in 2020. This dramatic shift removed platinum's historical price advantage and made palladium the primary metal in many catalytic converters, substantially driving down platinum's demand.
Platinum's supply-side vulnerabilities further compounded its challenges. Approximately 70% of the global platinum supply originates from South Africa, with Russia and Zimbabwe also being key producers. This high geographic concentration makes platinum supply highly susceptible to localized disruptions, including labor disputes, power outages, and geopolitical tensions. While such disruptions can lead to sudden price spikes, they also introduce significant market uncertainty and supply risk. During periods of weak demand, this inherent supply risk, combined with platinum's higher volatility compared to gold, deterred long-term institutional investment. The market prioritizes "surety of supply", and a concentrated, unstable supply chain undermines this, pushing investors towards more diversified or less volatile assets.
Investment sentiment also played a role in platinum's decline. Unlike gold, which is widely considered a safe-haven asset and is often stockpiled by central banks, platinum has not traditionally held the same appeal for investors seeking stability during crises. Platinum's price tends to be more volatile than gold and silver due to its heavy reliance on industrial demand. This volatility, coupled with a lack of a sustained bullish trend for many years, led many investors and traders to remain on the sidelines. The "Managed Money" category of traders, for instance, which was never net negative on platinum prior to Dieselgate, began betting against the metal 31.3% of the time after the scandal, reflecting a significant erosion of investor confidence.
Is Platinum Returning to Fashion? Drivers of Resurgence
Despite the significant challenges of the past decade, platinum is now demonstrating a compelling resurgence, driven by a powerful combination of structural market imbalances, evolving industrial demand, and renewed investor confidence.
Structural Supply Deficits
The platinum market is facing a significant and ongoing supply deficit for the third consecutive year. The World Platinum Investment Council (WPIC) projects a deficit of 848,000 ounces for 2025, with other reports citing up to 966,000 ounces. Total platinum supply is expected to decline by 4% to 7.002 million ounces, the lowest in five years, mainly due to reduced mining output in South Africa from operational issues and adverse weather conditions. Year-on-year mine supply fell 13% in Q1 2025, while recycling rates have also dropped, leading to faster depletion of above-ground stocks, anticipated to fall by 25% to 2.535 million ounces by the end of 2025. This structural shortfall, along with dwindling stocks, is likely to exert upward pressure on prices, evident from increased platinum lease rates signaling scarcity.
Automotive Demand Resilience & Re-substitution
Despite the rise of electric vehicles, the automotive sector remains the largest consumer of platinum. The use of platinum in hybrid vehicles is robust, as these often require more platinum for catalytic converters. A key driver of demand is the re-substitution of platinum for palladium amid palladium shortages and its higher price. Automakers benefit from using cheaper platinum and are motivated by tighter emission standards that ease this transition. This has led to a 14% increase in automotive platinum demand in 2021. While the WPIC projects a modest 2% reduction and Johnson Matthey a 5% contraction in automotive demand for 2025, the overall trend remains resilient amidst market uncertainties.
Surging Chinese Demand
China is emerging as a pivotal driver of platinum's resurgence. Chinese platinum imports in April 2025 soared to 10 metric tons, representing a 47% increase from March and marking the highest monthly volume in a year. This surge is largely attributed to increased purchases of platinum bars, coins, and jewelry, as investors and consumers actively seek more affordable alternatives amidst historically high gold prices. Retail investment demand in China jumped 48%, with smaller platinum bars seeing a remarkable 140% surge, indicating a broad-based increase in consumer interest. The WPIC forecasts a 15% increase in Chinese platinum jewelry demand for 2025 , alongside a substantial 48% increase in China's bar and coin demand. This points to a fundamental change in how platinum is perceived by a large and influential consumer base, moving beyond its traditional industrial role to becoming a more widely accepted investment and luxury good, thereby providing a new, substantial demand pillar.
Growing Investment Interest
Beyond China, global investment interest in platinum is robust. The Abrdn Physical Platinum Shares ETF has risen 18% in 2025, reflecting growing investor confidence. Overall investment demand surged by 300% in Q1 2025 compared to the previous year, with the WPIC forecasting a 7% growth for the full year, reaching 688,000 ounces. This renewed interest is driven by platinum's perceived undervaluation relative to gold and increasing concerns over tightening supply. Digital platinum investment is also soaring, with a 133% increase in volume sold on the DigiPlatinum platform in Q1 2025. In Q1 2025, investment demand was further bolstered by significant metal inflows into US exchange warehouses (NYMEX stocks rising by 361,000 ounces) in response to tariff-related uncertainty, demonstrating a proactive market response to perceived supply risks.
Emerging Industrial Applications
While automotive demand remains significant, platinum's future is increasingly tied to its diverse and growing industrial applications, particularly in the burgeoning hydrogen economy.
1. Hydrogen Economy
Platinum Group Metals (PGMs) are critical for enabling the use of green hydrogen to achieve decarbonization goals. Platinum is essential in proton exchange membrane (PEM) technology for both upstream applications (electrolyzers that produce hydrogen by splitting water) and downstream applications (hydrogen fuel cells that generate power). Hydrogen-related platinum demand is forecast to reach over 600,000 ounces by 2030 and could account for 11% of total platinum demand by 2030, increasing from 40,000 ounces in 2023 to around 900,000 ounces. Long-term projections suggest it could comprise as much as 35% of total annual platinum demand by 2040. Demand from the hydrogen sector surged 92% in 2024 and is forecast to grow 35% in 2025. The hydrogen economy represents a transformative long-term demand catalyst for platinum, potentially offsetting declines in traditional sectors and fundamentally reshaping its market profile. Platinum's critical role across the entire hydrogen value chain, from production to usage and even transportation (e.g., in Liquid Organic Hydrogen Carriers (LOHCs) and e-fuels), positions it as a key enabler of the global energy transition. This deep integration into a rapidly growing, decarbonization-driven industry provides a powerful long-term growth narrative for platinum, diversifying its demand base beyond the automotive sector and insulating it from the full impact of EV adoption. This positions platinum as a "green energy metal," attracting a new class of environmentally conscious investors.
2. Other Industrial Sectors
Platinum's use in the medical sector saw a 6% increase in 2024 and is forecast to grow 4% in 2025. It also sees robust demand in electronics, chemicals (e.g., fiberglass, biofuels, synthetic fuels, petroleum refining), and defense applications. While glass industry demand is forecast to decline significantly by 58% in 2025 after a surge in 2021 and 2024 due to cyclical capacity expansion tapering, overall industrial demand remains robust in these key areas.
Conclusion
Despite these compelling tailwinds, certain market uncertainties and potential risks persist. As an industrial metal, platinum's demand is sensitive to global economic health, meaning a significant economic downturn could temper industrial and automotive demand. Uncertainty over US import tariffs and potential retaliatory actions could also impact PGM use in auto and industrial applications, potentially leading to cuts in vehicle production and reduced secondary supply. While hybrid vehicles provide a buffer, a faster-than-expected transition to battery electric vehicles could still impact long-term automotive demand if new applications do not grow sufficiently to compensate. Furthermore, the concentrated supply from South Africa and Russia means that geopolitical tensions or labor disputes could still cause supply disruptions and price volatility. Finally, while above-ground stocks are dwindling, the presence of over 3 million ounces in stockpiles could still cap significant price upside in the short term, as they can be drawn down to meet deficits.
In conclusion, platinum is strategically important not only for its traditional industrial uses but increasingly for its pivotal role in the global energy transition, particularly within the hydrogen economy. This positions it uniquely among precious metals, offering a long-term growth narrative tied to decarbonization efforts. For investors, platinum presents a compelling case for diversification. Its volatility, while a risk, also offers significant opportunities for those who understand its supply-demand fundamentals and its evolving role in a changing industrial landscape. Its current undervaluation, coupled with strong underlying demand drivers and persistent supply deficits, suggests that platinum's "return to fashion" may be more than a fleeting trend, potentially signaling a sustained period of revaluation.
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