Mine supplies weakness and recycling constraints
Looking ahead to 2025, the primary concern is production. Global refined output dropped to 1.45 million ounces in Q2 of 2025, down from 1.54 million the previous year during the same quarter. South Africa, the leading producer, experienced significant rainfall in the first quarter, and production remained beneath 2024 levels into Q2. The WPIC forecasts a 6% decrease in total mine supply from South Africa this year. In contrast, analysts project a 4% decrease in Zimbabwe and a staggering 26% drop in North America, while Russia may see a slight increase of 1%.
On the recycling front, the supply has shown some improvement but is still considered weak. Secondary supply grew by 6% year-on-year to 1.6 million ounces, largely thanks to profits from automobile recycling. However, WPIC highlights that these levels are historically low. Unlike palladium or rhodium, platinum recycling is less responsive to price changes. Consequently, even with prices surpassing $1,450 in July, incoming scrap remains limited.
Stockpiling and mixed demand outlook
The overall platinum supply is projected to decline by 3% in 2025, reaching 703 million ounces. Concurrently, ground stockpiles are diminishing, with inventories down by 22% this year, dropping from 5.51 million ounces in 2022 to 2.98 million ounces.
As for demand, the outlook appears mixed. Industrial applications are expected to fall by 22%, and the automotive sector could see a 3% decline due to slower production rates. On a more positive note, WPIC anticipates an 11% increase in jewelry demand this year, bringing it to 2.23 million ounces. A notable 42% surge in manufacturing by Chinese wholesalers seems to be a response to falling gold sales.
In 2025, uncertainties surrounding tariffs introduced volatility in investor demand. Earlier this year, there was a notable flow of physical platinum into the US amid concerns over potential trade restrictions. Although these worries briefly subsided, they flared up again with the announcement of copper tariffs. Geopolitical risks in South Africa add further pressure to supply.
Despite the overall drop in demand, the supply shortage remains significant. While prices are rising, they’re not sufficient to stimulate new mining ventures. Deep-level mining continues to be expensive, and even a 50% increase in basket prices is unlikely to spark additional supply. So, the underlying structural pressures are still there, which tends to bolster a more optimistic outlook for platinum prices in 2025.
