Platinum prices have risen sharply over the past 10 days to their highest in over a decade as a surge in gold and silver prices has exacerbated existing supply tightness and steady demand.
Specialty chemicals company Johnson Matthey assessed platinum at $1,608/t on 29 September, up by 15pc since 19 September, when the price started rising sharply after slower but significant gains in the second quarter. Platinum has now reached the highest in 11 years and is up by 72pc this year.
The recent price increase has been a "sympathy rally", a senior industry executive said. Platinum prices have been lifted by runs in gold and silver prices driven by concerns about US economic policy, inflation and the independence of the Federal Reserve.
The Federal Reserve on 17 September announced a lending rate cut of a quarter point, and indicated that further cuts may come.
While US dollar concerns were a partial driver of the recent surge on platinum and other precious metals, strong underlying fundamentals are also pushing platinum higher.
"While a stronger US dollar triggered a brief pullback, platinum's rally remains supported by Fed rate cuts and robust industrial demand, especially in the automotive sector," Dominik Sperzel, head of trading at Heraeus Precious Metals, told Argus.
High liquidity, low supply in 1Q lift prices
Platinum trade liquidity increased in early 2025 as speculation about potential US tariffs on the metal drove a sharp rise in platinum imports to the US.
Over 500,000oz of platinum metal flowed into Nymex inventories by early April, Heraeus said in the company's annual Palladium Standard report.
The movement of metal into Nymex warehouses has been volatile, and those inventories have since been drawn down and then risen again.
"That withdrawing of liquidity from London coincided with physical demand from China and heavy buying on the Shanghai gold exchange, which tightened the market and set the scene for the current run-up in platinum prices," Rupen Raithatha, director of market research at Johnson Matthey, told Argus.
An increase in physical platinum demand in China in the first quarter was driven by higher investment and jewellery demand that also lifted gold prices, according to the World Platinum Investment Council (WPIC).
A significant number of Chinese jewellery makers stepped into the platinum business this year, with involved jewellery producers rising from less than 10 to over 30.
At the same time, already tight South African mined supply of platinum dropped by 10pc year on year in the first quarter, the WPIC said.
In the second quarter, that sharp drop in mine supply and solid demand began to translate into higher platinum prices, setting the scene for mid-September's sharp spike.
Third year of market deficit to support Pt
The flooding of the first quarter exacerbated a more long-term decline in South African platinum production.
"The real story lies in supply — mine supply, particularly from the largest mining region, has been shrinking over the years and consequently above-ground stocks have collapsed, creating a tight, volatile market," Sperzel said.
The platinum market is expected to record its third consecutive year in deficit in 2025, and deficits are likely to remain persistent as mine supply from South Africa falls further in coming years. The WPIC expects a full-year deficit of 850,000oz in 2025.
After several years of persistently low platinum group metal (PGM) basket prices, major South African PGM producers have closed shafts, carried out major restructuring and delayed new investment.
The structural decrease in PGM production in South Africa is unlikely to shift significantly in the coming years even if platinum prices rise, as the investment in future production required to take advantage is not being made now.
Meanwhile, global demand for platinum has remained strong despite a forecast 4pc year-on-year decrease in demand in 2025, in part driven by lower appetite from the glass sector.
Platinum continues to benefit from substitution in the auto industry despite a rise in battery electric vehicles and industrial demand is relatively robust, multiple market participants said.
In the short term, it remains to be seen if the surge in platinum jewellery production in China will translate into increased retail sales.
The Golden Week holiday in China in October is normally strong for retail sales, and if the platinum jewellery manufactured does not sell, it is likely to be remelted and the metal will return to the market, which may weigh on prices.
Near-term fluctuations in gold and silver prices and the value of the US dollar will also have a significant impact on platinum prices, but prices are likely to remain supported above 2024 levels for the rest of this year.
