Having surged nearly 80% in 2025, platinum has become one of the best-performing commodities. The latest report from the World Platinum Investment Council (WPIC) indicates that although the market may move towards balance in 2026, fragile supply chains, volatile investment demand, and intense competition for physical metal between the US and China are pushing the platinum market into an unprecedented period of high volatility.
The core issue in the current platinum market is a persistent structural supply shortage. WPIC data shows that the global platinum market is expected to see a supply deficit of 692,000 ounces in 2025. Although this is slightly narrower than previous estimates, the tight situation remains severe.
South Africa, the world’s largest platinum producer, is plagued by soaring costs and operational disruptions, leading to a 5% year-on-year decline in global mine supply, which is 10% below the pre-pandemic five-year average. Despite a 7% increase in recycling supply to 1.619 million ounces, it still cannot compensate for the shortfall in primary supply.
On the demand side, while automotive sector demand (accounting for about one-third of the total) remains stable due to resilience in the fuel-powered vehicle market, industrial demand is expected to fall sharply by 22%. However, investment demand has emerged as a key variable driving prices, forecast to grow 6% to 742,000 ounces in 2025.
A new variable in the platinum market in 2025 stems from the competition for platinum between the US and China, which is reshaping the global supply chain and exacerbating market tightness. Tariff threats and the inclusion of platinum on the US critical minerals list have prompted large flows of platinum into US warehouses. In just the last three weeks, New York warehouses absorbed nearly 290,000 ounces of the metal. This phenomenon of “inventory transfer” rather than “inventory increase” has led to physical shortages in traditional trading hubs like London and Zurich.
As the world’s largest platinum consumer, China’s imports hit a record of 1.2 million ounces in the second quarter, consistently exceeding estimates of domestic consumption. The imminent launch of platinum futures on the Guangzhou Futures Exchange, which will for the first time publish inventory data, will enhance transparency in the Chinese market and could also strengthen China’s influence over international pricing.
Analysts point out that the tightness in the platinum market is most evident in lease rates. The recent one-month implied lease rate remains above 10%, down from a peak of 35% in July but still far above the normal level near zero. These “crazy lease rates” have sharply increased costs for industrial users, even causing market liquidity to dry up at times. Tim Murray of Johnson Matthey admitted that in his 36-year career, he has never seen such sustained tightness in the platinum market.
The WPIC forecasts that the platinum market will achieve a small surplus of 20,000 ounces in 2026, but this “balance” is actually very fragile. Firstly, if global trade tensions ease, an estimated 150,000 ounces of platinum is expected to flow back from US warehouses to London, creating an illusion of balance without solving the fundamental supply shortage. Secondly, prices need to rise significantly further to stimulate new production. Craig Miller, CEO of Valterra Platinum, stated that while about 90% of mines are now profitable, prices would still need to increase by about 50% to incentivize new project investment.
In conclusion, the platinum market is at a crossroads of structural transformation. On one hand, years of underinvestment and production challenges in South Africa limit supply elasticity. On the other hand, US-China geopolitical competition is distorting inventory distribution and amplifying physical tightness. Even if the market statistically moves towards balance in 2026, the fragility of the supply chain and the major powers’ scramble for strategic resources will likely keep platinum prices trading at elevated levels.
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