(Kitco News) – Platinum prices are likely to remain rangebound next year despite strong demand and tightening supply, while an outright decline in palladium demand could see prices fall further in 2025, according to analysts at Heraeus Precious Metals.
In their Precious Forecast 2025, the analysts said that rising demand and a supply deficit still might not be enough to lift platinum prices out of their trading range next year.
“The platinum market is forecast to remain in deficit in 2025,” they said. “The deficit is expected to widen as gains in demand more than outweigh modest increases in primary and secondary supply. Platinum requirements in both automotive and industrial uses are expected to rise, helping to lift total demand to over 7.6 moz.”
The analysts expect primary platinum production to rise to 5.4 million ounces next year, with South African platinum output projected to grow to 3.9 million ounces. “Russia’s platinum production is set to recover to normal levels in 2025, after a smelter rebuild reduced refined output in 2024,” they wrote. “However, North American supply is estimated to drop by about 50 koz following the restructuring at Stillwater mine.”
Recycled platinum is also expected to be slightly higher in 2025. “Recycling of autocatalysts has had its challenges over the last couple of years as older cars have continued to be sought after amid cost-of-living pressures and so were not scrapped as rapidly as might otherwise be the case,” they noted. “With new light-vehicle sales forecast to rise next year, an improvement in volumes of spent autocatalysts is anticipated. However, if cost-of-living pressures continue, that might push more people into the second-hand market, keeping autocatalyst recycling at a more subdued level.”
Platinum requirements for industrial uses are projected to increase by 6% to over 2.5 million ounces in 2025, with gains likely across all the main sectors. “Electrical usage is rising as data storage requirements are increasing,” Heraeus said. “Catalytic processes in the chemical and petroleum industries are also expected to have greater platinum requirements. Slightly higher demand is also anticipated in the glass industry and medical sector.”
Jewelry demand, by contrast, is expected to decline in 2025. “Platinum jewellery sales in China have continued to slide in 2024,” the analysts noted. “Consumer confidence has been relatively low as the Chinese economy has struggled with a real-estate bust, and gold jewellery has been favoured. That is expected to remain the situation in 2025. Weak economic growth is likely to weigh on demand in Japan and Europe, but North America and India have better prospects.”
The investment environment for platinum has been positive in 2024, driven by renewed interest from ETF investors. “Year-to-date ETF holdings are 258 koz higher than at the start of the year, at almost 3.2 moz, though that is down from the 3.4 moz total in the middle of the year,” they said. “Bar and coin demand has not been particularly strong outside of China. The price volatility of platinum in yen has meant that Japanese investors have been net sellers of platinum bars so far this year.”
Heraeus forecasts the spot price of platinum to trade between $850 and $1,220 per ounce in 2025.
“The market is expected to tighten next year, supported by strong automotive and industrial demand. However, the platinum price has been range-bound for several years even though the market has shifted from surplus to deficit, as stocks are plentiful,” they noted. “A resumption of dollar strength has weighed on the price recently and should the rand depreciate further, that removes one source of price support.”
Turning to the palladium market, Heraeus expects conditions to be less tight next year than they were in 2024.
“The palladium market is projected to be near balance in 2025,” the analysts wrote. “Secondary supply is predicted to expand modestly, as is primary supply where the return to normal production in Russia outweighs reduced output in North America. Meanwhile, demand is predicted to dip slightly as combustion engine light vehicles lose market share to BEVs.”
Palladium production is projected to rise by 2% in 2025 to a total of 6.4 million ounces. “Supply from Russia is expected to recover to normal levels after a smelter rebuild in 2024 reduced refined output. Production in South Africa is forecast to be modestly higher owing to some stockpiled material being processed and improving grades lifting output at Mogalakwena, the largest palladium producing mine.”
“After significant cost-cutting and some limited production cuts to address margin pressures, further production cuts are not currently anticipated in South Africa,” they added. “However, should PGM prices continue to fall, then further adjustments could be made to production plans. In North America, restructuring at Stillwater will reduce yield by around 150 koz next year.”
Like with platinum, the secondary supply was low this year, and the 2025 outlook is only marginally better as the second-hand car market is expected to remain strong.
“New light-vehicle sales are forecast to rise modestly in the US and Europe next year, which should result in more older vehicles being scrapped,” they said. “The recycling industry in China has also experienced some challenges and new regulations may need to be put in place to enable a resumption of autocatalyst recycling. The risk is that if the economic situation deteriorates in the US or Europe, that might also result in fewer old vehicles being scrapped.”
Overall palladium demand is forecast to decline by 3% next year to 9.0 million ounces, driven largely by a drop below 7.5 million ounces in automotive demand. “Industrial demand is projected to increase slightly as palladium edges out more expensive gold in some electrical applications and its use in chemical catalysts rises, which more than offset a further decline in dental use,” the analysts wrote.
“However, there could be some upside for palladium demand if more ICE and hybrid vehicles are sold than is currently being forecast,” they pointed out. “The re-election of Trump as US president could result in changes to government support for BEVs, slowing their sales growth. In Europe, concerns have been expressed by several automakers that BEV market share targets in the UK and the EU’s new, lower fleet CO2 emission requirements will be unachievable.”
“If the targets are eased to align them with actual sales, that would imply higher sales of light vehicles with combustion engines and some upside for palladium demand,” the analysts added.
Heraeus forecasts the spot price of palladium to trade between $800 and $1,200 per ounce in 2025.
“The palladium price has been falling for more than two years and had declined by 72% at its lowest point in 2024,” the analysts concluded. “The length of time and size of the decline are in line with other bear markets, suggesting the low point may be near. However, the market is expected to be less tight in 2025 than in 2024 as demand dips, and the price could remain under pressure.”
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