- Platinum market to record a deficit in FY 2024, extending into 2025
- Prices continue to decline, dropping 6% year-to-date and 10% month-over-month
- Deficit forecast to persist in 2025, with a projected deficit of 539 koz
Harare- The global platinum supply experienced a 7% year-over-year (YoY) increase to 1,479 koz in Q3 2024, primarily driven by augmented stock releases in South Africa. This uptick in supply was a welcome development, however, it is crucial to acknowledge that the platinum market is still grappling with a deficit.
This deficit is not a consequence of elevated demand, but rather a comparative analysis of supply vis-à-vis prior periods and years.
Year-to-date, platinum prices have declined by 6%, with a monthly contraction of 10%. The decline in prices is attributed to excess supply, including stocks, which commenced in late 2023 and has persisted into 2024.
Major platinum-producing countries, including South Africa, Russia, Zimbabwe, Canada, and the USA, have concentrated on augmenting platinum production to counterbalance lower prices.
However, this strategy has yielded a suboptimal uptick in platinum production.
The platinum market has also been impacted by global geo-political tensions.
The Russia-Ukraine war and the Israeli war on Gaza have precipitated currency fluctuations and production cost inflation, thereby compressing margins and exacerbating profitability challenges for platinum producers.
As a consequence, investors have pivoted towards safe-haven assets, such as gold, while scaling down investments in platinum.
Despite these challenges, the platinum market is anticipated to remain in deficit in 2024, with a forecast deficit of 682 koz.
Total demand is expected to remain robust, driven by the automotive sector and emerging applications in green hydrogen production and sustainable aviation fuel.
In 2025, a third consecutive market deficit is forecast at 539 koz, with total demand remaining strong at 7,863 koz (-1% YoY) and total supply remaining constrained, increasing by 1% to 7,324 koz.
Trevor Raymond, CEO of the World Platinum Investment Council, remarked, "2025 will mark the third consecutive year in which the platinum market experiences a significant and meaningful deficit, driven by robust demand and ongoing supply vulnerabilities. At a time when the global economy is uncertain, one might expect an industrial metal like platinum to perform poorly.
“However, as we see in today's findings, platinum demonstrates its resilience due to its diverse end-uses even in the current environment.”
Ongoing headwinds present downside risks to supply into next year, especially as miners reassess production plans and restructure operations to manage the negative impact of the platinum group metals' basket price on mining sustainability.
South Africa remains the world's largest platinum producer, accounting for 90.1% of global reserves. The country's platinum sector makes a significant contribution to its foreign exchange earnings, job creation, and overall economy.
However, the sector is facing challenges, including the persistently low platinum group metal (PGM) basket price and ongoing restructuring. These challenges are expected to persist into 2025.
The platinum market is also anticipated to benefit from emerging applications in green hydrogen production and sustainable aviation fuel. Platinum group metals (PGMs) are experiencing increasing demand specifically for their use in these sectors.
Additionally, PGMs have numerous potential applications in the de-carbonisation of the energy transition and chemical industries, as well as production of sustainable aviation fuel.
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