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Highlights
- Platinum supply deficit predicted for 2024 amid growing demand.
- Automotive and jewelry sectors drive higher platinum usage.
- Industrial platinum demand projected to decline next year.
The platinum market is expected to face significant supply challenges in 2024 as demand from automotive and jewelry sectors grows. According to the World Platinum Investment Council (WPIC), the market is likely to experience a supply deficit driven by robust consumption in key industries, while industrial demand is anticipated to decrease.
Automotive Sector Leads Demand Growth
The WPIC forecasts automotive demand for platinum to reach its highest levels since 2017 by 2025. This rise is fueled by automakers adapting to produce more hybrid vehicles with lower CO2 emissions, which aligns with regulatory requirements. Automotive demand is projected to grow incrementally in 2024, driven by the increased adoption of internal combustion engine-based hybrids.
Jewelry Sector Boosted by Indian Market
The jewelry segment is another area contributing to demand growth. The WPIC anticipates a steady increase in platinum usage for jewelry, particularly supported by the Indian market, where fabrication levels are expected to rise. The sector is forecasted to grow modestly next year, adding to the global demand for platinum.
Supply Constraints Persist
Despite these strong demand drivers, the WPIC highlights ongoing supply challenges. In its Q3 2024 Platinum Quarterly report, the council indicated that mined platinum supply remains flat compared to constrained levels in 2023. Although South Africa saw a temporary boost in production during Q3 due to stock releases, overall supply for 2024 is expected to remain unchanged.
Recycling efforts are projected to improve slightly, growing by a small margin in 2024 and 2025. However, the cumulative increase will not be enough to meet the sustained high demand.
Industrial Demand Faces Decline
Industrial demand for platinum, while still above its decade-long average, is forecasted to decline in 2025. This drop is attributed to the completion of substantial capacity expansions that had driven higher usage in recent years.
Risks to Supply Stability
WPIC cautioned that ongoing restructuring and persistently low prices for platinum group metals could add downside risks to supply stability. On a positive note, the organization noted improving conditions for global recycling, with a notable recovery expected by 2025.
Looking ahead, global mine supply is expected to contract further by 2025, potentially widening the supply-demand imbalance in the platinum market.
