Recently, World Platinum Investment Council (WPIC) published Platinum Quarterly, Q1 2025, that said, the platinum investment case – sifting through the geopolitical noise! Platinum’s investment case remains compelling, with the market entering its third consecutive year of projected deficits. Against this backdrop, however, evolving US trade policy has heightened economic uncertainty.
The Trump administration has announced, implemented, backtracked and renegotiated on a wide swathe of tariffs since November 2024. Below, we outline the impacts of the market response to tariff fears, improved tariff certainty, indirect tariff risks to platinum demand, and the potential impact of tariff risk escalation.
The spectre of US tariffs initially appeared all encompassing at the start of 2025. Markets pre-emptively responded to the risk of platinum imports being tariffed, resulting in a flow of metal into the US and into exchange stocks with NYMEX stocks rising by 361 koz to 631 koz through the first quarter. In the first quarter of 2025 the implied exchange for physical (EFP) spread peaked at around US$65/oz, while lease rates spiked to 13% from around 1% in last quarter of 2024.
The detailed announcement of tariffs on 2nd April 2025 offered more clarity on how platinum would be impacted by US tariffs. As things stand, the majority of platinum imports (sponge, grain, ingot etc.) are exempt from tariffs as platinum is considered a critical strategic mineral. Manufactured products that contain platinum (catalysts, wash coats etc.) are subject to tariffs, as are minted platinum products that are not classified as legal tender.
In effect, bullion coins are exempt, but minted platinum investment bars are subject to tariffs. As a large proportion of US minted bar supply is imported from Switzerland, this is unhelpful for investment demand in the US. Although US bar and coin demand is projected to increase by 21 koz year-on-year in 2025, the updated
Platinum Quarterly outlook for 2025 reflects a 16 koz reduction in US bar and coin demand for the year compared to our March 2025 Platinum Quarterly.
Direct imports of platinum into the US are primarily in the form of sponge, grain, ingot and scrap and thus platinum is broadly exempt from direct tariffs. The exemption and designation of platinum as a critical mineral likely reflects platinum’s importance in several strategic industries as well as the fact that US domestic primary plus secondary supplies are inadequate to meet its needs (being about 700 koz p.a. short of consumption).
Markets have responded to there being a less than feared direct impact of tariffs on platinum imports, with lease rates coming down (to ~7% at the start of May 2025), the EFP easing, and metal beginning to move back out of exchange warehouses, although it may not necessarily be moving back to Europe as yet. The 2025 forecast in this Platinum Quarterly is for exchange stocks to increase by 150 koz, which implies expectations for further reductions in NYMEX stocks for the remainder of 2025 since there was an accumulation of 361 koz of platinum in Q1 2025.
Although platinum has largely avoided direct tariffs, platinum demand will still be indirectly impacted by tariffs since it is an input used in a diverse range of products imported by the US. This updated Platinum Quarterly outlook for 2025 reflects the indirect impact of tariffs on the market outlook through the automotive and jewellery segments.
Global automotive platinum demand forecasts have been reduced by 50 koz as light-duty vehicle production estimates are trimmed by ~2 million units, while heavy-duty fleet investments are deferred on expectations of lower trade volumes. The impact of tariffs on platinum jewellery demand is more nuanced. Indian platinum jewellery fabrication has been reduced by 45 koz since our last Platinum Quarterly as exports to the US are expected to be impacted by tariffs.
However, where heightened trade, geopolitical and recessionary risks have supported higher gold prices through the first quarter of 2025, there has been a consequent negative impact to Chinese gold jewellery demand (-32% in the quarter). Chinese jewellery fabricators and retailers have in response to consumers being priced out of gold, begun initiating some switching from gold to more affordable and higher margin platinum jewellery, leading to expectations that Chinese platinum jewellery demand will increase by 15% year-on-year in 2025 (+62 koz).
Industrial platinum demand is largely tied to new plants being commissioned, the timing of which is a function of long-term investment decisions. Accordingly, the global economic uncertainty arising from US trade policy is yet to materialise in substantial revisions to the near-term outlook for industrial platinum demand (i.e. 2025 forecasts).
Platinum’s unique properties and associated uses in a diverse range of end markets help to mitigate the negative impacts of trade wars and the associated erosion of global GDP growth rates; as a result, the adjustment to the 2025 platinum demand outlook is probably less than might be expected. Total platinum demand is forecast to decline by -4% year-on-year in 2025 (-338 koz) and with a projected market deficit of 966 koz. Given compelling market fundamentals, a severe and sharp deterioration of economic conditions would be required to materially reduce entrenched supply shortfalls, which seems unlikely.
Turning to supply, total platinum supply is expected to decline by -4% year-on-year in 2025, thereby broadly matching the decline in demand. Supply side risks remain a key theme facing platinum markets: where miners spent 2024 restructuring assets and capital budgets for lower prices. As for recycling, volumes have struggled to return to pre-COVID levels. Notably, total platinum supply is expected to fall below 7 Moz in 2025 which, barring COVID, will be the lowest level in our time series dating back to 2013 and reflects structural headwinds facing supply (-1% CAGR since 2015).
In conclusion, the structural deficit in the platinum market is embedded and continues to deplete above ground stocks which are expected to fall to barely three months of demand by the end of this year. Over time, this is an unsustainable situation as commodity markets typically self-solve for a deficit with price stimulating a supply response or disincentivising demand. While the large platinum market deficit recorded in Q1 2025 failed to sustain upward moves in the platinum price, this likely stems from investors’ concerns about demand destruction from tariffs and potential flowbacks of accumulated NYMEX stocks.
In addition, market tightness is reflected in elevated lease rates which have the effect of encouraging the lending of platinum to end users, which acts as a temporary source of supply until such time as the borrowers need to return metal to close out the loans. It remains to be seen whether sufficient platinum will be available at that time at current prices. We believe both supply and demand are relatively price inelastic, at least in the near-term, and this presents an attractive investment opportunity.
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