Platinum continues to see strong demand despite its recent record rally, according to experts at the World Platinum Investment Council (WPIC). The precious metal, widely used in the automotive industry, has seen its price soar to around USD 1,373 per ounce, breaking out of a long-standing trading range. The WPIC analysts believe that the platinum market is relatively inelastic, meaning that price fluctuations have a limited impact on demand.
The WPIC experts predict that the current rally in platinum prices is unlikely to dampen demand significantly or trigger a substantial increase in production by platinum producers. They anticipate that the market will continue to experience a structural deficit, with supply trailing behind demand. In fact, the WPIC estimates a deficit of 966,000 ounces in 2025, marking the third consecutive year of supply shortfall.
Looking ahead, the WPIC forecasts a persistent deficit in the platinum market until 2029, leading to a depletion of above-ground platinum stocks by that time. Both primary (mining) and secondary (recycling) sources of platinum face challenges, further exacerbating the supply-demand imbalance.
Despite these supply constraints, demand for platinum remains robust. The automotive sector, particularly in hybrid vehicles, continues to drive demand for platinum due to its use in catalytic converters. Additionally, the slow pace of the energy transition in the transport sector and increasing demand from China for investment and jewelry purposes are bolstering overall demand for the precious metal.
Historically, changes in platinum prices have not immediately translated into shifts in supply or demand. The WPIC data suggests that any reactions to price changes typically occur with a delay of several years. The structural inelasticity of platinum further reinforces the notion that strong price signals are unlikely to spur rapid adjustments in supply.
Notably, platinum demand has shown limited volatility in response to short-term price movements in the past. For instance, between 2003 and 2008, automotive sector demand for platinum surged by 25% despite a significant price increase from around USD 600 to approximately USD 2,000 per ounce.
In conclusion, the platinum market’s resilience in the face of price fluctuations underscores its unique dynamics and the enduring appeal of this precious metal across various industries.
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