The platinum price surged past US$1,600 per ounce, reaching a 12-year high. The precious metal’s rally was fueled by supply constraints and steady demand from various sectors. With over 70 percent of platinum demand stemming from industrial and automotive industries, the market remains sensitive to economic cycles. Despite economic uncertainties boosting gold prices, platinum is benefitting from stable auto sector demand, emerging hydrogen fuel cell industry interest, and ongoing supply challenges, particularly in major producing nations like South Africa.
According to Eugenia Mykuliak, founder of B2PRIME Group, the platinum market is facing supply pressures, evident in the metal’s recent price breakthrough. South African producers, responsible for a significant portion of global output, are grappling with energy shortages and underinvestment, while recycling volumes remain low. The World Platinum Investment Council forecasts an 850 koz deficit in 2025, marking three consecutive years of shortages.
The WPIC’s Q2 Platinum Quarterly report anticipates a 6 percent drop in global platinum mine supply to 5.43 million ounces for the year. Challenges like heavy rainfall and flooding in South Africa have compounded the industry’s struggles. Despite the price uptick offering some relief, sustainable mining operations and new developments remain elusive at current price levels.
On the demand side, platinum continues to find support from various sectors. In the automotive industry, platinum is crucial for catalytic converters in emissions control systems, particularly for hybrid vehicles. The hydrogen sector also relies on platinum as a catalyst for green hydrogen production and fuel cells. Additionally, Chinese demand for platinum jewelry is expected to rise, with China likely to drive a significant portion of the predicted 11 percent year-on-year increase in jewelry fabrication.
Although the platinum price retreated slightly from its recent high, experts like Mykuliak maintain a positive outlook, expecting volatility but foreseeing a potential price range of US$1,650-US$1,750 by year-end. Factors like intensified South African power disruptions or accelerated hydrogen policies could propel prices further, possibly reaching US$2,000. Despite short-term corrections, the fundamental outlook for platinum remains optimistic.
Investors are advised to stay updated with real-time developments in the platinum market. The industry’s dynamics, influenced by supply pressures and sustained demand, underscore platinum’s significance as a valuable investment option.
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