JOHANNESBURG (miningweekly.com) – The rising platinum price is unlikely to dampen demand or stimulate additional supply, meaning that forecast market shortfalls are here to stay, says the World Platinum Investment Council (WPIC).

‘Inelastic' is a term used by economists to describe a situation where a change in price has a relatively small impact on the quantity demanded of a good or service. In other words, consumers will continue to purchase roughly the same amount even if the price increases or decreases.

In contrast, an elastic relationship means that changes in price will result in a significant increase or decrease in the supply or demand of a good or service.

Platinum prices have recently reached a ten-year high, exceeding $1 420/oz as of June 26.

This follows a prolonged period when platinum's price was stuck at a range which varied from around $900/oz to $1 100/oz.

Yet, because the relationship between the price of platinum and its supply or demand is largely price inelastic, the platinum price rally is unlikely to dampen demand or stimulate mining companies to produce additional metal, meaning that, in the platinum market, supply will continue to lag demand, resulting in a structural deficit, WPIC states.

To put this in context, the platinum market is expected to record its third successive shortfall this year, at 966 000 oz.

This follows a deficit of 992 000 oz in 2024 and a deficit of 896 000 oz in 2023.

Moreover, looking at the WPIC two-to-five-year forecast through to 2029, deficits are forecast to occur every year.

ROBUST DEMAND

Consecutive supply deficits are expected to see above ground stocks run out by 2029. Meanwhile, platinum supply remains challenged, both in terms of primary mining and secondary recycling supply.

At the same time, the demand outlook is robust. Demand for hybrid vehicles and slower-than-expected battery electric vehicle adoption is supportive of platinum automotive demand, while strong demand growth in investment and jewellery is being experienced in China.

Data supports the view that both platinum supply and platinum demand are largely price inelastic in the medium term.

One chart displayed by WPIC illustrates that historical movements in the platinum price did not trigger an immediate change in supply or demand, with responses often lagging by several years. On the supply side, platinum’s inelasticity is structural, the chart shows.

A second chart highlights that even sharp price signals take years to translate into new supply, with most mines requiring eight to nine years to reach full production capacity. Moreover, investment decisions need to consider platinum’s price potential as well as the price potential of the overall platinum group metals basket plus base-metal by-products.

Demand is also unlikely to fall in the short term, despite the price rally making platinum more expensive for industrial end-users.

Across the automotive, jewellery and industrial sectors, platinum consumption has historically shown limited volatility in relation to short-term price movements.

Between 2003 and 2008, for instance, automotive demand rose by over 25% even as prices climbed from around $600/oz to $2 000/oz, only falling after the global financial crisis precipitated a broader widespread commodity downturn.

Industrial demand has shown some delayed inverse relationship with price, but volumes tend to adjust over multiple years.

Jewellery is structurally more elastic, yet platinum’s relatively more attractive affordability versus gold is now emerging as a counterforce.

The gold-to-platinum price ratio reached 3.5x in May 2025, its highest level since 2015, prompting some Chinese fabricators to switch to platinum, the WPIC release, covered by Mining Weekly, shows.