JOHANNESBURG (miningweekly.com) – The platinum market recorded a deficit of 995 000 oz for full year 2024, which is 46% higher than previously forecast, as total demand exceeded eight-million ounces for the first time since 2019 compared with supply at 7 293 000 oz. (Also watch attached Creamer Media video.)

Investment demand rose by a whopping 77% year-on-year to 702 000 oz amid above-ground stocks sinking down to below four months of reliability.

Investment demand propellers were exchange trade funds (ETF), final-quarter exchange stock inflows, and the supplier of legal tender coins in China launching a 1 kg platinum bar in addition to the platinum panda and platinum lunar series.

Platinum’s sustained consecutive annual deficits of almost one-million ounces in 2024 contain some investment flows related to the recent tariff-driven chaos but is largely structural in nature, World Platinum Investment Council (WPIC) CEO Trevor Raymond has pointed out.

Increases across all regions uplifted platinum jewellery demand by 8% in 2024, with jewellery forecast to grow in 2025 to a six-year high.

Mine supply is forecast to decline by 5% in 2025 and global recycled supply continues to bite the dust.

Encouragingly, hydrogen demand showed positivity by translating into platinum uptake, while automotive demand remained steady on higher-for-longer internal combustion engine vehicle levels.

Mining Weekly put these questions to WPIC director of research Edward Sterck. (Also watch attached Creamer Media video.)

How have the various geopolitical issues around the world affected platinum supply and demand?

Geopolitics are centre stage right now. There's a huge amount of rhetoric and, in some cases, invective, which is influencing the movement of material and also how consumers are behaving. There's been some overtures for some kind of rapprochement between the US and Russia and there's been some speculation from people as to whether that would improve the flow of platinum, palladium, other platinum-group metals (PGMs) out of Russia to the world, and thereby ease any kind of temporary constraints. On our numbers, that isn't the case. We see Russian material continuing to flow into the market, and it's fully baked into our supply-demand estimates, so nothing really changes if that rapprochement does come to something. The other side of the equation, however, is tariffs, which are effectively a tax on the consumer in the country where they're enacted, and there’s a risk that if the US does actually impose tariffs, it could increase the price of products and thereby decrease consumer demand. It's also worth noting that tariffs are fundamentally inflationary in their effects, because they increase the cost of products, so from an economic perspective, that could result in higher-for-longer interest rates in the US and also a stronger US dollar, both of which are somewhat negative for platinum demand, and, in terms of the strong US dollar, also arguably negative for US dollar-denominated platinum prices.

How much of the strong investment growth in late 2024 was driven by tariff uncertainty and market turmoil?

Investment demand was really rather fascinating to watch last year. We saw generally consistent bar and coin demand, if you aggregate smaller bars and coins and the larger ones out of China. But what really swung around was ETF demand. We saw strong inflows in the second quarter of the year, outflows in the third quarter, and then a return of demand in the fourth quarter. We also saw quite strong inflows into what we describe as exchange stocks, which are stocks held in approved warehouses by the futures exchanges like NYMEX in the US. These exchange stocks are used as collateral for backing positions in the futures market. We saw a very big inflow into the NYMEX-approved warehouses in the fourth quarter. Effectively, even before the incoming Trump administration got into office, Donald Trump started talking about tariffs, and the very fear of those tariffs being enacted caused market concern among participants who were backing their future position with, say, platinum lodged in a facility in Europe, rather than in the US. If they had to move that platinum into the US, would they then have to pay tariffs on it? So, they started moving in ahead of time, and we've seen this huge inflow of metal from Europe into the US, and a corresponding increase in exchange-approved warehouse holdings on NYMEX in particular, which drove a significant increase in fourth-quarter investment demand figures. That inflow continued into the first quarter of this year.

Why has platinum recycling supply declined to its lowest level in the Platinum Quarterly time series?

We don't have any hard-and-fast reasons as to why the recycling number has fallen as far as it has. What we can say is that there’s a demonstrable shortage of end-of-life vehicles and thereby end-of-life catalytic converters going through the system. We can theorise as to why there’s that shortage. Arguably, people are just driving vehicles for longer. With elevated interest rates, buying new vehicles is relatively more expensive, so consumers may be less motivated right now to buy a new car. If you talk to the recyclers, they’re not seeing a flow of material coming in for them to process and effectively provide platinum as recycled supply. That situation seems to be perpetuating. If you look at our estimates for the last 18 to 24 months or so, we've been continually downgrading our outlook for recycling supply.

What about the use of platinum in the hydrogen economy?

It’s growing really quickly. We're talking about almost 50% in terms of year-on-year growth last year, with substantial growth again going into 2025. It’s important to stress that it is growing off a low base, but that growth is encouraging. Hydrogen has taken longer than anticipated. Part of the reason for that has been the availability of subsidies. We’re now seeing those subsidies flow and that's beginning to translate into real demand for platinum.

What is driving jewellery demand?

If you look at it on a holistic basis, effectively, what we've had is ongoing declines in demand from China, and China was a huge market for platinum jewellery in the past. It peaked at over two-million ounces in 2014 and it's declined now to around 400 000 oz. However, what we’ve seen in that past ten-year-plus period is consistent growth from the world, excluding China, and we've got to the point now where the decline in China is being more than offset by growth in Europe, the US, the rest of the world, with even China showing some positive signs. For the last five quarters, in fact, Chinese jewellery demand has grown quarter-on-quarter, which is quite encouraging. What's helping it, I think, is the price of gold, which has risen to the point where white gold is being priced at a premium to platinum. For a consumer, if you're given the option of white gold, which is 75% pure at best, or platinum, which is usually almost totally pure, most people, particularly in Europe and North America, are going to go for platinum, which is proving to be extremely beneficial in driving demand for a lot of which is in the bridal segment and in the premium product segment. India, I think, is benefiting from that in terms of consumer psychology as well. Obviously, India is a huge market for gold demand, but the jewellery fabricators and retailers are devoting more counter space to platinum. Their premiums are better on platinum than they are on gold and our sister organisation, Platinum Guild International, has done a good job of developing the market in India through tailored advertising and sponsorship. Some Indian cricketers have been sponsored to wear platinum jewellery, which has been extremely helpful.

How is it possible that demand is good but prices are still low?

It's really because the imbalances in the market have been satisfied by flows from above-ground stocks. There's been enough vaulted material made available to offset the market imbalances. But above-ground stocks are being depleted and at some point, the market price will respond to reflect that. Platinum’s been in a fairly well-established sideways trading range of between roughly $900/oz and $1 100/oz for several years now. If you put that on a chart, you’ll notice that the trading range is narrowing and typically what you see is it narrows down to a point of reaction to either the upside or the downside. Given the underlying fundamentals for platinum and the deficits, we would argue that it's probably going to be a positive response.

CYCLICAL GLASS DEMAND

In 2024, industrial demand was just under 1% lower year-on-year at 2 462 000 oz. Gains in the glass (+29% to 670 000 oz), medical (+6% to 308 000 oz), electrical (+5% to 94 000 oz) and hydrogen (+92% to 44 000 oz) sectors could not outweigh a 26% decline to 609 000 oz in the chemical sector, as strategic capacity expansions in China’s petrochemical industry, that occurred primarily between 2019 and 2023, concluded.

Industrial demand is expected to be 14% down in 2025 at 2 116 000 oz largely owing to an anticipated tapering in the cyclical glass capacity expansions that boosted demand substantially last year.

Chemical demand is forecast to decline 5% to 578 000 oz, while growth is expected in the petroleum (+30% to 205 000 oz), electrical (+2% to 96 000 oz), medical (+4% to 320 000 oz) and hydrogen (+35% to 59 000 oz) sectors.

AUTOMOTIVE DEMAND

In 2024, automotive platinum demand fell 2% to 3 130 000 oz as total light-duty catalysed vehicle production, which includes both internal combustion engine (ICE) and hybrid vehicles declined by 2% and heavy-duty vehicle production declined by 5%.

Heavy-duty vehicle production faltered in the second half of 2024, reflecting declining freight volumes and excess capacity in the trucking sector, which was compounded in Europe by a reduction in ICE light-duty vehicle production.

Year-on-year automotive platinum demand growth in other regions, including North America, Japan, and rest of the world, failed to offset these reductions.

Forecast for 2025 is a level well above the five-year average.

MINING SUPPLY

Last year, global mining supply rose 3% year-on-year to 5 766 000 oz, driven by stronger-than-expected output from South Africa and Russia.

In South Africa, production grew 4% year-on-year to 4 132 000 oz on the back of work-in-progress inventory drawdowns and reduced production curtailment resulting from loadshedding.

In Russia, furnace repairs were completed ahead of schedule, and output was steady at 677 000 oz.

For 2025, refined platinum mine supply is forecast to contract by 5% year-on-year to 5 506 000 oz on palladium-related decline in North America and reduced output in South Africa, with much lower expectations for work-in-progress inventory releases.

Meanwhile, downside risks, such as the persistently low PGM basket price that has resulted in significant restructuring, remain.

The members of WPIC, which was established in 2014, are Anglo American Platinum, Impala Platinum, Northam Platinum, Sedibelo Platinum, Tharisa, Bravo Mining and Podium Minerals.