JOHANNESBURG (miningweekly.com) – A leading branded jewellery retailer in Beijing is including platinum investment bars in its offering amid platinum bar sales being launched on TikTok for the first time by a World Platinum Investment Council (WPIC) partner.

Chinese buying of platinum investment bars smaller than 500 g have grown 140% year-on-year to a record 31 000 oz, with overall first-quarter bar and coin demand up 17% to 70 000 oz.

Investment demand has been driven by a sharp rise in exchange-held platinum stocks as tariff-related uncertainty and a widening location premium encouraged higher platinum inflows into the US.

“We're also seeing very strong jewellery demand, particularly in China,” WPIC research director Edward Sterck highlighted to Mining Weekly in a comprehensive interview that coincided with the publication of WPIC’s latest first-quarter Platinum Quarterly. (Also watch attached Creamer Media video.)

Overall first-quarter platinum jewellery demand increased 9% to 533 000 oz and platinum is the big beneficiary of the many jewellers in China wanting to have investment products on offer.

Overall first-quarter platinum investment demand rose 28% quarter-on-quarter to 461 000 oz and the WPIC-linked Shanghai Platinum Week in the second week of July is likely to elevate platinum demand still further.

Stores of value are being sought and platinum fits that bill, particularly at this time of exceptionally high gold price.

Full-year bar and coin investment is forecast to strengthen by 30% to 252 000 oz, driven by 48% growth in China and a return to growth in the North American market at a forecast 18%. Growth in bars of or above 500 g in China will continue its upward trajectory to reach a 15%-higher 186 000 oz.

Despite capacity constraints and increasing competition in the first four months of this year, WPIC partners have achieved record-breaking sales, positively influenced by the sweeping resurgence of platinum jewellery demand in China.

Quarterly gains in green hydrogen hit the 159% mark and overall global first-quarter demand lifted 10% to 2 274 000 oz on the strong investment demand, driven principally by a sharp rise in exchange held platinum stocks. Full year hydrogen demand is expected to rise by 35% to 59 000 oz.

At the same time, first-quarter mining supply fell 13% year-on-year to 1 086 000 oz, the lowest since the second quarter of 2020 and a first-quarter deficit of 816 000 oz emerging as the largest single quarterly deficit in six years.

“I think the deficit is embedded. It's structural, and we're likely to see a series of deficits come through in future years as well,” Sterck noted.

On top of the ongoing robust global demand for platinum group metals (PGMs), these amazing metals are becoming increasingly diverse, with the four core automotive, industrial, jewellery and investment demand segments combining to provide a beneficial degree of resilience, even as the US government’s new approach to tariff policy starts to take effect.

“Platinum’s diversity of end uses is to its benefit. A lot of those end uses are quite price inelastic, so ultimately, you've got to get down to the product level for things really to change,” Sterck pointed out.

This beneficial diversity enabled strong first-quarter investment demand growth to counter balance declines in automotive and industrial demand, which took place in the thick of platinum supply falling 10% to 1 458 000 oz and which could not be offset by a modest year-on-year recovery in recycling.

Automotive demand remained resilient despite market uncertainty and  he strategic importance of PGMs to the US automotive industry has so far spared the metals from US tariffs and even the broader impact of trade restrictions is highly unlikely to materially reduce the deficit of 966 000 oz of platinum the WPIC is forecasting for 2025.

Investment demand has been driven by a sharp rise in exchange held platinum stocks as tariff-related uncertainty and a widening location premium encouraged higher metal inflows into the US, with some 361 000 oz of inflows during the quarter.

Mining Weekly: The platinum market is in structural deficit – do you expect this to change in light of  the current geopolitical uncertainty?

Sterck: There's a huge amount of uncertainty around at the moment, and that makes putting in place forecasts quite challenging. So, the first answer is, absolutely, there's potential for changes to come through. That said, I think platinum’s diversity of end uses is to its benefit. A lot of those end uses are quite price inelastic, so ultimately, you've got to get down to the product level for things really to change. Now, part of the uncertainty that's associated, in principle, with these tariffs that the US is trying to bring into place, is reflected in the forecasts. Our deficit of 966 000 oz, which has increased by 118 000 oz from our March update, includes a 50 000 oz reduction to automotive demand. That's related to US tariffs. However, that's more than offset by an increase in jewellery demand. We're seeing very strong jewellery demand, particularly in China, and part of that's related to the high gold price. It's also related to an increase in investment demand. Again, that's partially related to the high gold price, but also due to the kind of politico-economic uncertainty. People are looking for stores of value, and platinum fits the bill. So, yes, there is scope for things to change, but as things stand at the moment, based upon a snapshot today, we think that the risks are factored into that forecast, and the market deficit is also, I would add, a very substantial one of almost a million ounces in what is almost an eight-million-ounce-a-year market. It's pretty difficult to envisage a scenario whereby this economic uncertainty would negatively impact demand to the point of that that deficit would be eradicated. So, I think the deficit is embedded. It's structural, and we're likely to see a series of deficits come through in future years as well.

What effect have the US tariffs had on platinum demand and supply?

There have been quite a number of different effects. If we start with supply, supply is broadly unimpacted by the US tariffs. There might be some kind of impacts in secondary supply, given that these tariffs are likely to result in an increase in vehicle prices in the US. That means people scrap fewer vehicles and they continue to run older vehicles for longer. That could reduce recycling supply, for example. We're still waiting to see how the dust settles on that one before updating numbers there. But in terms of demand, that's really where the impacts will be felt. Higher vehicle prices in the US could reduce demand for new vehicles. We estimate that every 1% increase in vehicle prices in the US reduces demand by half a percent, so there is a moving scale here in terms of the potential impact. Our forecasts already have 50 000 oz demand loss baked into them. To see a bigger change to that would probably require a fairly seismic shift in the tariffs as proposed. The tariffs for vehicles and for automotive parts have moved around a bit, and it feels like they've kind of settled on where they're going to play out now, so I think those numbers are fairly embedded. Another area where we could see a negative impact is jewellery, if that would be subject to tariffs. But on the other hand, platinum sponge, platinum ingot, isn't subject to tariffs, and can be imported easily into the US. However, some investment products are tariffed. Minted product that is not currency is subject to tariffs, so that does impact some of the investment bars that are produced in Europe and sold in the US. So, there are some things that could negatively impact the outlook there, but we have seen quite a lot of pre-buying ahead of tariffs in order to try and get ahead of that, and there are work-arounds that people are trying to put in place.

What's been happening to supply?

Well, mine supply is its lowest in five years on a quarterly basis, at the beginning of 2025, but if you look past the first quarter of 2020, which was heavily impacted by Anglo American Platinum ACP outage and the beginnings of COVID, it's the lowest quarter in mine supply in our time series going back to 2013, so quite significant. The year as a whole is also expected to be particularly weak. I think it is the weakest in our time series, and again, if you look beyond 2020, and other people's time series, back until the 1990s, so mine supply is under strain. The first quarter was particularly heavily impacted by the rains that South Africa experienced and the associated flooding, but it was also negatively impacted by some smelter outages, both planned and unplanned, by the restructuring of some operations in North America, and by smelter refurbishment in Zimbabwe as well. So, there were quite a few specific quarterly challenges that obviously we would expect supply to recover from. I think the overall trend in supply is for a structural erosion of output.

Why are strong platinum jewellery gains anticipated in China?

We're seeing big shifts in China. We're taking a fairly cautious view on this, and I'm not sure that the potential is fully baked into the forecast, as yet. If we were having this conversation even six months ago, I'd probably have said something like flat’s the new outlook for jewellery. But we're seeing things change really quickly, and it's largely due to that high gold price. Fabricators and retailers are seeing a significant decline in gold jewellery purchases because consumers are being priced out of the market. But also, I think, the psychology is gold is so high at the moment, and given that jewellery in China is a quasi-investment type purchase, consumers are somewhat worried that the downside risk to gold is greater than the upside potential, and so they're not buying gold. The fabricators and retailers are pivoting some of their product offering away from gold and into other metals, and platinum is a big beneficiary of that, and that's helpful for the fabricators and retailers as well, because the price of gold having gone so meteoric has massively increased their working capital requirements, so switching into other metals helps release that working capital, and platinum is a higher margin product, and we're seeing a lot of gold stores in Shenzhen and Xu Bay, which are the main jewellery centres in China, being turned over 100% to platinum jewellery, so a lot of encouraging green shoots there and hopefully that continues.

Why is investment demand forecast to remain robust?

Again, it's gold price related. People are looking for a currency-like asset that they can hold, and gold has been very much passed that for a long time. We've been developing the platinum investment market in China since 2016 and bar and coin investment in China for platinum was virtually zero until 2018. We've now grown it last year to over a quarter of a million ounces. This year is continuing to go from strength to strength. The high gold price obviously is helpful in terms of investors looking for lower cost alternatives that have a good underlying fundamental story and upside potential. Platinum fits that bill. Also, with the spread of gold jewellery within China, a lot of those jewellers want to have investment products to offer their clients as well, and they bring in platinum investment products. So, again, it feels like there's just a growing momentum of both fabricators and retailers, and consumer demand, all coming together.

The sharp rise in demand for exchange held platinum stocks is interesting. What’s expected for the rest of the year?

Exchange stocks fit within the demand side of our supply-demand forecasts, but it's not really truly demand. It's more visible above-ground stocks, effectively, that are lodged with the exchange as collateral for futures positions. In December last year, we saw a really strong increase in exchange stocks, which was related to trading opportunity. Tariff fears in the US resulted in people looking to pre-purchase metal to get ahead of tariffs in case platinum was subject to additional charges. They were prepared to pay more for future deliveries of platinum in the futures market, which resulted in the steepening of the curve. That created an arbitrage opportunity, which prompted traders to short the longer end of the curve, and to go long on the front end. To go short, you’ve got to collateralise that trade with moving metal into Nymex-expanded warehouses. We saw those exchange stocks go up significantly, almost half a million ounces, in fact. To answer your question, that has begun to unwind a little bit as the tariff fears have softened, but we're certainly still seeing a lot of those exchange stocks remaining sticky. They're still 150 000 oz higher than our forecast for 2025 as a whole. To get back to that 966 000 oz deficit, we'd have to have a further 150 000 oz flow out of those exchange stocks. Given the ongoing vacillations from the US administration in terms of tariffs, sustaining those tariff figures is probably quite valid at this point in time, so that metal is likely to remain in place for the rest of the year.

Looking at the platinum price leads me to again ask why the current platinum price does not reflect the deficit and Mining Weekly is also interested to hear more about the elevated platinum lease rates and what this tells us?

Price is the elephant in the room. Why hasn’t the platinum price responded? It's been locked into this sort of sideways trading range for getting on for five years now. What I'd probably add is that range is pinching out. We're getting lower highs and higher lows, which is usually indicative that a breakout will be coming in the not too distant future. That said, the market is actually looking increasingly tight, so we're seeing strong backwardation in the forward curve in Europe, which is a signal that metal is in short supply, and we're also seeing these elevated lease rates that you just mentioned. If you look back at the 2010s, lease rates hovered at pretty close to 0%. They’ve since spiked several times in the last five years. They're now sustained at 6% to 7% levels. Again, that's a sign of tightness in the market, so people are prepared to pay more in order to borrow metal. If we think about the role of above-ground stocks in all of this, they're being depleted quite rapidly by these ongoing deficits that we're forecasting, but they are acting to balance the market in the meantime. Now, of course, there's a declining residual amount of those above-ground stocks and I think what we're seeing is, because of the elevated lease rates, those are quite attractive for the holders of those residual above-ground stocks, and incentivise them to loan that metal out, which is helping to add liquidity to the market. It's preventing the price increasing at the moment, but ultimately, that borrowed metal is a temporary situation. The borrowers of that metal have to go into the market at the end of that loan to buy metal to return to the lender, and so I think that's the point at which we'll see things really begin to look more interesting. Of course, trying to predict that is very difficult. We don't know what the terms of any loans might be. There's probably a spread of them across the next three to 12 months, so I think it's a question of things just gradually heating up over the course of the rest of the year.

PRODUCTION DECLINE

With weakness across all major producing regions, except Russia, South Africa accounted for the bulk of the decline, experiencing unusually intense rainfall during the quarter, leading to a 10% year-on-year drop in refined output to 715 000 oz.

The fall in total mining supply was partially offset by an increase in global recycling supply of 2% to 372 000 oz. As a result, total supply fell 10% year-on-year to 1 458 000 oz.

While some recovery is likely throughout the remainder of 2025, full year total mining supply is expected to reach a 6%-lower 5 426 000 oz, which is 11% below the five-year pre-COVID average.

Global recycling is forecast to show a modest recovery in 2025, growing 3% year-on-year to 1 573 000 oz as the supply of spent autocatalysts improves slightly.

Overall, total supply is expected to decline by 4% in 2025 to 6 999 000 oz.

Above-ground stocks are forecast to decline by 31% to 2 160 000 oz, resulting in only three months of demand cover.

JEWELLERY RECOVERY

For full year 2025, jewellery demand is expected to continue the recovery seen in 2024, increasing by 5% year-on-year to 2 114 000 oz, as platinum continues to benefit from its price discount relative to gold.

Strong gains are anticipated in China, up 15% year-on-year to 474 000 oz, while European demand is forecast to grow 7% to reach a record high.

North America will also see 8% growth, while demand in India is due to soften, falling 10% year-on-year to 240 000 oz owing to reduced exports amid US tariff uncertainty.

Set against the context of uncertainty as US tariff policy continues to evolve, automotive demand for platinum proved relatively resilient, declining by 4% year-on-year to 753 000 oz. This resilience is reflected in the full year outlook, with automotive demand expected to fall only 2% to 3 052 000 oz, which is 11% above the prior five-year average.

A 2% increase in demand from non-road vehicles is expected to partially offset a 7% decline in heavy-duty automotive demand against a backdrop of slower-than-expected battery electric vehicle growth and with flat demand from light-duty vehicle production.