Platinum prices fluctuated in 2024, trading between US$900 and US$1,100 per ounce.
Some of the gains were due to strong demand from the automotive sector, which reached a seven-year high during the first quarter, and rate cut speculation in May, which prompted a run on both base and precious metals.
Platinum reached its year-to-date high of US$1,094 on May 17.
The price of the metal also benefited from a supply shortfall of more than 450,000 ounces for the year.
Demand expected to increase in 2025
According to the most recent data from the World Platinum Investment Council, overall platinum demand is expected to remain relatively flat in 2025, falling just 1.1 percent to 7.86 million ounces from 7.95 million ounces in 2024.
The automotive sector will remain the largest price driver, but for how much longer remains to be seen.
Both platinum and palladium can be used in the loadouts for catalytic converters, which help eliminate toxic emissions from tailpipe gasses. As their prices fluctuate, platinum and palladium tend to be swapped.
Currently, palladium is trading at a premium to platinum, and it will likely need to be considerably lower before parts makers start retooling processes to swap between them.
Although light vehicle sales are expected to grow by 1.7 percent to 89.6 million in 2025 an increasing number of those will be electric vehicles that don’t require platinum or other metals from the platinum group of elements (PGE).
S&P data projects that EV market share will rise to 16.7 percent over the next year, a significant increase from the 7 percent share it had in 2023. Despite this, automotive use of platinum is expected to see a 2.25 percent gain in 2025.
Platinum demand for autocatalysts is expected to reach 3.25 million ounces, the highest since 2017 when it reached 3.3 million ounces.
Jewelry also provides significant demand for platinum and is forecast to see a 1.64 percent rise to 1.98 million ounces up from the 1.95 million ounces the previous year.
Investment demand is also expected to grow in 2025, rising 6.9 percent to 420,000 ounces from 393,000 ounces in 2024.
Meanwhile, the demand gains will be offset by a 9 percent decline in industrial demand to 2.26 million ounces from 2.43 million ounces last year. The use of platinum in the production of glass is forecast to decline the most, 57.38 percent, to 286,000 ounces from 671,000 in 2024.
Due to its high melting point, platinum is used to line vessels and coat equipment used in the production of glass, particularly glass used for liquid crystal displays. In 2021, the use of platinum surged as display manufacturers increased furnace capacity and glass fibre production lines.
Supply set to decrease
Overall, platinum supply is forecast to increase marginally by just 0.76 percent to 7.32 million ounces, up from the 7.27 million ounces produced in 2024. This sets the market up for a significant supply shortfall of 539,000 ounces.
Refined production is expected to contract by 1.35 percent, with 5.55 million ounces entering the market compared to 5.63 million ounces produced last year. Of the 76,000 ounces lost, 70,000 are attributable to a fall in production from South Africa.
The drop-off was acknowledged in August when Paul Dunne CEO of platinum producer Northam (OTC Pink:NPTLF,JSE:NPH) said the “industry had entered into a phase of irreversible decline.” He suggested it was due to a combination of low prices and a challenging demand landscape as EV adoption gains traction.
Secondary supply from all recycling sources is expected to reach its highest level since 2021 rising 11.78 percent to 1.77 million ounces.
Although platinum is predicted to be in a supply deficit for the third year in a row, this may not significantly impact prices owing to more than 3.01 million ounces held in above ground stockpiles.
What does it mean for the price?
In a video outlook, Jeffrey Christian, managing partner at CPM Group, predicts that platinum will remain relatively flat, in 2025, possibly facing downward pressures in the year ahead.
This would put the price for the precious metal in the US$900 to US$1,000 range.
With the platinum market expected to continue in deficit through 2025, Heraeus Precious Metals believes this will add some pricing support. However, like CPM, it doesn’t see much upside for the metal over the next year.
The firm predicts the metal’s price will range from US$850 and US$1,220.
UBS echoed this sentiment when it set a price target of US$1,100 for the middle of the year.
The Swiss bank believes that an easing of the US Federal Reserve rates will support real assets, though it suggests platinum is likely to lag behind gold until the rates support higher industrial activity.
There is still some geopolitical tension in the market, and with platinum markets predicted to remain tight in 2025, it may not take much to upset that balance. An example of this came in October, when the threat of further sanctions against Russia caused pricesfor both platinum and palladium to rise.
Securities Disclosure: I, Dean Belder, hold no direct investment interest in any company mentioned in this article.