(Kitco News) - Although platinum prices continue to struggle, the market remains well-supported as the World Platinum Investment Council (WPIC) anticipates market deficits in 2024 and 2025.
In an interview with Kitco News, Edward Sterck, Director of Research at the WPIC, said that the platinum market continues to experience solid demand as supply struggles to keep pace. He added that this is expected to remain a persistent theme in the marketplace for the foreseeable future.
“Platinum’s outlook is fairly compelling when you look at the ongoing disconnect between supply and demand,” he said.
The comments come as the WPIC released its third-quarter platinum market report. According to the updated research, the precious metal is expected to face a deficit of 682,000 ounces, down from the million-ounce deficit projected in the second quarter.
In its initial outlook for 2025, the WPIC is forecasting a market deficit of 539,000 ounces.
Sterck noted that the market imbalance improved slightly in the last three months as production in South Africa picked up and stockpiles in COMEX warehouses shrank. Although the deficit has narrowed, Sterck emphasized that this doesn’t change the fundamental long-term outlook.
The automotive sector remains the biggest source of demand for platinum. The precious metal is a critical component in autocatalytic converters, which are used in internal combustion engines (ICE) to reduce harmful emissions.
The WPIC reported that automotive demand for platinum has struggled throughout 2024 as ICE vehicle sales have slowed due to persistently high interest rates. Steady demand for electric vehicles, which don’t require platinum, also continues to weigh on the market. Automotive sector platinum demand is expected to fall to 3.173 million ounces this year, down 3% compared to the third quarter of 2023.
However, looking to 2025, the WPIC expects automotive demand to rebound, increasing by 2% to reach an eight-year high of 3.245 million ounces.
Beyond the automotive sector, industrial demand for platinum is expected to remain relatively stable despite robust 15% growth in the third quarter.
“This growth was driven by a 10% rise in the electrical and medical sectors and a 96% jump in glass sector demand, albeit from a low base,” the report said.
For the full year, industrial demand is forecast to fall slightly to 2.434 million ounces, down 1% from the previous year. However, this momentum is not expected to continue in 2025, with demand projected to decline by 9%.
One pillar of strength for the platinum market is growing jewelry demand. The report noted that after solid growth in the third quarter, jewelry demand is projected to rise to 1.951 million ounces, up 5% from last year.
India has been a key market for platinum jewelry, with consumption reaching 66,000 ounces in the third quarter—the second-highest quarterly figure in WPIC’s time series since 2013.
Jewelry demand is expected to remain robust in 2025, with the WPIC forecasting a 2% increase.
“Growth is anticipated to continue in India and is also expected in North America, driven by post-election sentiment, and in China, supported by product innovations,” the report stated.
Investment demand for platinum remains mixed. The market saw outflows in platinum-backed exchange-traded funds (ETFs), while higher prices in the third quarter also weighed on small bar and coin demand.
However, the WPIC highlighted that Chinese demand for large bars has been relatively strong. Total investment demand for 2024 is expected to fall to 393,000 ounces, down 1% compared to last year.
Looking ahead, the WPIC projects investment demand to rebound in 2025, with a forecasted increase of 7%.
“While global bar and coin investment demand is forecast to ease by 12% to 151 koz, bar and coin demand in North America is projected to return to growth. Platinum ETF holdings are also expected to rise by 50 koz, as some U.S. investors look to gain exposure to higher-for-longer internal combustion engine vehicle production,” the report concluded.
