Key Takeaways:
Platinum is set for a 265,000-ounce surplus in 2026, ending three consecutive years of deficit, as investors retreat from the metal and Chinese jewellery demand weakens.
The World Platinum Investment Council, the industry-funded research body, said total demand will fall 18 percent this year to 7.09 million ounces, driven principally by lower investment demand, while mine supply stays broadly flat at 5.55 million ounces.
ETF liquidations of 234,000 ounces in the second quarter drove net disinvestment of 121,000 ounces, the single largest factor behind the quarterly surplus of 244,000 ounces. Full-year net disinvestment is projected at 83,000 ounces, with ETF outflows of 389,000 ounces only partially offset by second-half inflows.
The surplus masks a persistent supply constraint. Above-ground stocks are forecast to end the year at 2.01 million ounces, just 3.4 months of global demand cover, after the 2025 deficit was revised deeper to 1.44 million ounces. South African deep-level mines, which supply about 70 percent of global output, cannot easily expand because of geological limits on narrow tabular reefs.
Investor exodus drives the swing
Bar and coin investment is forecast to fall 22 percent to 313,000 ounces for the full year, while exchange stocks are expected to unwind by 112,000 ounces as tariff fears that drove last year's build recede. Chinese jewellery demand is compounding the weakness: full-year consumption is forecast to decline 15 percent to 1.88 million ounces, with the contraction concentrated in China, where the reversal of last year's inventory build, weak consumer demand and a renewed trade preference for gold are expected to drive a sharp fall in fabrication. Second-quarter jewellery demand fell 32 percent year-on-year to 456,000 ounces.
Geology caps the supply response
The entire 2 percent increase in total supply this year comes from recycling, forecast to rise 8 percent to 1.80 million ounces. Mine supply is expected to remain flat at 5.55 million ounces as modest gains in South Africa are offset by declines elsewhere.
Edward Sterck, director of research at WPIC, said the principal constraint on primary production is geological. South African PGM mines operate narrow, tabular reefs — the Merensky Reef is around 70 centimeters thick, while the UG2 can reach about 1.3 meters — that cannot be mechanised or scaled up easily when prices rise.
"On the primary side, on the mining side, it's just geology," Sterck said.
The supply picture is further complicated by the fact that platinum is not mined on its own. PGM deposits also yield palladium, rhodium, gold, nickel, copper and chrome, each with different demand outlooks. More than 80 percent of palladium and rhodium demand is linked to catalytic converters, creating uncertainty for miners evaluating new projects against the electric-vehicle transition.
Recycling growth is partly a temporary response to higher prices. Lower PGM prices between 2022 and 2024 led to catalytic converters being stockpiled because they were uneconomic to recycle; higher prices have brought some of that material back into the market.
Industrial platinum demand offers a partial counterweight, forecast to rise 5 percent to 2.39 million ounces in 2026 as AI-related glass and electrical applications boost consumption. Glass demand is projected to grow 23 percent (98,000 ounces), electrical demand 19 percent (19,000 ounces), and chemical demand 9 percent (50,000 ounces).
"China has earmarked nearly $300 billion for AI infrastructure development through 2030, together with the US privately funded buildout of AI technology, currently estimated at $500 billion, creating new demand for platinum group metals across a range of applications," WPIC CEO Trevor Raymond said.
Automotive demand, which accounts for roughly 40 percent of platinum consumption, is forecast to fall 4 percent to 2.9 million ounces this year, a relatively modest downgrade as oil price volatility and inflationary pressures from the US-Iran conflict weigh on light-duty vehicle production. Platinum traded at $1,859.70 per ounce on Sept. 9, compared with gold at $4,403.60, according to market data.
This article is for informational purposes only and does not constitute investment advice.
