Platinum moved into a more pronounced deficit position in 2024, with demand outstripping supply of the precious metal by nearly 1 million ounces, according to the World Platinum Investment Council’s (WPIC) Platinum Quarterly for Q4 2024.
A significant portion of that came in the final quarter of the year, when the deficit grew by 313,000 ounces. This was driven largely by investment demand on the back of Donald Trump’s victory in the presidential election and subsequent rhetoric over planned trade and foreign policy.
Increased demand adding to supply draw down
According to the new report, the platinum deficit deepened in Q4 on the back of weaker recycling supply and stronger investment demand, coming in 313,000 ounces deeper than the council forecasted in its Q3 2024 report released in November.
In total, the last quarter of 2024 saw 360,000 ounces of demand uptake from investor inflows into the platinum market. On a more granular level, this demand came from 92,000 ounces of platinum bar and coin purchases, 142,000 ounces in platinum inflows to exchange traded funds (ETFs) and 126,000 ounces of platinum moving into exchange stocks. The WPIC defines exchange stocks as ‘platinum ounces held in approved storage facilities that serve as collateral for futures positioning.’
“So back in December, when the incoming Trump administration started talking about the threat of tariffs, we began to see that impact on the commodity markets in terms of distorting the flow of metals versus what would happen normally,” he said.
Similar to what was reported in gold markets, this resulted in institutional players moving physical products from Europe into New York Mercantile Exchange-approved warehouses in the United States.
“They needed to get that into the States because they’ve suddenly begun to worry that they might have to pay tariffs when they bring that material in in the future, and that would obviously impinge on profitability,” Sterck said.
Watch the full interview with WPIC’s Ed Sterck above.
In its projection for 2025, Sterck said the council sees a continuation of trends from 2024 and is predicting a third year of platinum deficits with an 848,000 ounce shortfall.
In its initial assessment, the WPIC expected 150,000 ounces of full year demand to come from exchange inflows to the NYMEX, but according to Sterck, 275,000 ounces have already been moved since the start of the year.
“You can see that even to get to our number for 2025, you’d have to have quite a significant unwinding of those NYMEX exchange stock flows to get back to where our full year estimate is. So if we were to close the year today, the deficit would be more substantial than our current projection,” he said.
Trump policy, the auto industry and platinum
If US tariffs on Mexico and Canada do come into effect, platinum investors and the auto industry are likely to feel the pinch.
Sterck explained that, while the bulk of North American auto manufacturing is carried out in the United States, the auto sector is highly integrated. Mexico manufactures about 45 percent of the United States’ automobile parts and 15 percent of the country’s vehicles, and Canada supplies an additional 10 percent and 7.5 percent respectively.
These automobile parts include the catalytic converters, which have significant load-outs of the core platinum group metals (PGMs): platinum, palladium and rhodium.
According to Sterck, the overall fear is that the increased cost of new cars for US consumers caused by the tariffs will reduce demand, putting downward pressure on PGMs as well.
“In terms of platinum, the downside risk to platinum demand on our numbers in a worst-case scenario is about 97,000 ounces. For palladium, it’s more substantial, something in the order of 350,000 ounces,” he said.
While this may more significantly impact palladium markets, Sterck doesn’t see this potential hit to platinum demand shifting the platinum deficit that the WPIC is predicting for 2025.
Other policy decisions by the new US administration will likely provide support for platinum, however.
‘Sadly, it looks like the US is going to be rolling back on its environmental commitments,’ Sterck said. ‘Obviously, that could be positive in terms of petroleum demand for PGMs (and) internal combustion engine demand for PGMs.’
Additionally, slowing of demand growth for electric vehicles (EVs) adds potential tailwinds for automotive platinum demand. Sterck suggests several factors contribute to the slowing rates, including US policy and backlash against Tesla (NASDAQ:TSLA).
While some consumers are turning to battery electric vehicles from other automakers, he notes that the trend of slowing growth in EVs is leading more consumers to look to cars with internal combustion engines, both traditional and hybrid, which require PGMs in their catalytic converters.
Supply side squeeze
On the supply side, Sterck sees consistent contraction in the mining supply.
“The reality is that there isn’t a (solely) platinum mine in the world,” he said. ‘These mines all produce — and therefore their economics depend upon — multiple different metals. They all produce all six of the PGMs, plus gold (and) nickel, copper and chrome.’
However, Sterck explained that lower prices for palladium, rhodium and more recently chrome has led some of the miners to restructure operations to focus on profitability rather than output. While this has been successful at supporting the mines’ economics, it has caused output to fall significantly.
He also says that the overall impact of the reduced output has been masked by platinum stockpiles entering the market, with higher inventory levels introduced in 2024.
He pointed to South Africa as an example, which saw reduced smelter output and a stockpiling of concentrate in 2022 and 2023 due to power shortages. In 2024, the decline in mine production came alongside an upside in refining those stockpiled materials, which boosted full-year numbers.
Platinum supply from recycling is expected to remain about 20 percent below the 10 year average at 1,496,000 ounces, a decrease of 278,000 ounces from the WPIC’s 2025 forecast in its November release. This drop was the largest difference between the two releases.
Sterck explained that one cause of depressed recycling supply in 2024 and 2025 is declining supplies of end-of-life vehicles.
“Part of that is related to COVID impacting supply chains, and then the semiconductor shortage reducing new vehicle production in the past and consumers being forced to run new vehicles for longer,” he said. However, he said there could be other reasons that aren’t as apparent.
What should investors know about platinum in 2025
As Sterck pointed out, the platinum market was volatile at the beginning of the year, so the 2025 WPIC forecast may need to be significantly adjusted. However, the group said the market will continue to experience structural deficits in 2025.
While investment demand surged 77 percent in 2024, Sterck sees a pullback of 14 percent in 2025, but even that is high compared to previous years.
“Overall, I think we’ve got 606,000 ounces projected in terms of total demand for 2025, a respectable level that’s historically elevated,” he said.
One significant area of growth so far in 2025 is futures trading on the NYMEX, with Sterck pointing to a 500 percent year-on-year increase in January.
However, there hasn’t been much price movement so far. Platinum has largely traded in the US$900 to US$1,100 per ounce range for the past year, but unusually, with the increased trading volume, the prices have narrowed.
“There’s increasing competition within the market for some sort of price direction, and at some point, the price has to break out of that narrowing range,” he said.
Given the market conditions for platinum, the WPIC expects that breakout would be a positive one, but it’s not a guarantee.
“When prices break out, it can go in both directions, so we will have to wait and see,’ Sterck said. ‘But it’s certainly very interesting, and there’s a limited amount of time left before something really needs to change.’
Securities Disclosure: I, Dean Belder, hold no direct investment interest in any company mentioned in this article.