In the third article in our weekly series on precious metals, we visit the platinum market, with analysis from Metals Focus, this time supplemented with further material from Trend Intelligence.
Platinum prices traded rangebound in 2022 and 2023 and this pattern has continued in 2024, with the metal trading between the same $850 and $1,100. This behaviour has been seen since mid-2021, and persisted even as gold rallied by more than $600 to record highs this year.
Platinum’s trading range has become somewhat self-fulfilling, with investors buying at the lower end and selling at the upper. To some extent, this floor stems from its largest physical deficit since 2002 (based on JM data before 2010), while abundant above-ground stocks from surplus years between 2016 and 2022 have provided much of the cap on prices.
As an example of platinum’s rangebound trading behaviour, net managed money positions have swung between net long and net short eight times this year, while gold and palladium have remained consistently net long and net short, respectively.
CME managed money net longs peaked in January at 1.2Moz, while the lows of 1Moz net short came in March, as investors traded platinum’s range. Platinum ETPs rose 9% ytd by end-August, driven by European investors capitalising on the metal’s relative value versus gold. However, profit taking above $1,000 and selling during early August’s global equity market turbulence caused positions to fall by 6% from June’s peak of 3.58Moz (111t).
In contrast to ETPs, retail investment demand has fallen sharply. In Japan, net disinvestment resumed due to higher yen-denominated prices, while North American demand has weakened due to such drivers as the absence of a US Mint platinum Eagle.
Platinum imports into China supported prices during 2021–2023, at times even resulting in physical market tightness. However, prior stockpiling and China’s economic slowdown have led to slower imports this year. This slack has since been picked up by opportunistic investors and the physical market deficit.
“Despite this, Chinese imports remain strongly inversely correlated to price,” Metals Focus said in its annual precious metals review. “Therefore, if the platinum price falls below its current range, we expect increased interest from speculative Chinese investors.”
Physical platinum market still in deficit
Platinum’s physical market balance remains in deficit for 2024, marking the second consecutive year of a shortfall. Both mined and recycled supply have stayed subdued for a third year. Mine production remains under pressure from the low basket price, which has led to cost-cutting initiatives, including shaft closures and labour retrenchments.
Autocatalyst recycling remains under pressure, as consumers keep vehicles for longer and scrapyards are hoarding material hoping for higher prices. Like supply, total platinum demand shows minimal change year-on-year. Growth in glass and a fall in chemicals demand largely balance each other out, as cyclical LCD capacity expansions offset slower Chinese paraxylene capacity growth.
The key demand sectors, automotive and jewellery, should prove more stable, according to Metals Focus, growing 1% and 6% respectively. Overall, platinum’s physical deficit is expected to reach 653koz (20.3t) in 2024, similar to the 2023 deficit. As a result, above-ground stocks are projected to fall to 9.6Moz (299t), equivalent to 15 months of demand.
Platinum has mostly traded rangebound between $850 and $1,100 since late 2021, and 2024 has been similar with a low of $869 (March) and a peak of $1,096 (May). This rangebound trend has become self-fulfilling, with investors buying in the low $900s and selling above $1,000.
“We expect this trend to persist in the short-term, while platinum’s fundamentals benefit the metal in the longer-term,” Metals Focus said.
Platinum has been supported in this trend during 2024 by the metal’s physical deficit of 653koz (20.3t), the market’s deepest deficit since 2002 (looking at JM data before 2010). Although this eases slightly in 2025, to 528koz (16.4t), the deficit will continue to support the price.
The easing deficit will be driven by increased supply, led by double-digit growth in autocatalyst scrap. Over the past three years, scrap supply was constrained by semiconductor shortages, high interest rates, and lower vehicle turnover. These constraints are expected to ease and have the potential of significantly boosting recycled supply in 2025.
However, Metals Focus believes mine supply will continue falling in 2025 due to low basket prices pressuring margins, leading to attrition from cost cutting at South African operations.
Conversely, overall platinum demand is expected to remain flat year-on-year. This is primarily due to a significant drop in cyclical capacity expansions of LCD production, which boosted platinum glass demand in 2024. However, growth in other sectors (including automotive, jewellery,
chemicals, and hydrogen) will offset this.
Automotive demand for platinum is set to increase
Automotive demand for platinum is projected to climb 3%, driven by continued substitution of palladium and higher loadings in heavy duty vehicles, despite a fall in light duty catalysed vehicle production. In contrast to the long-term bearish outlook for autocatalysts, hydrogen demand is expected to exceed 100koz for the first time in 2025.
Furthermore, the sector is experiencing strong double-digit growth, which will play a key role in supporting platinum’s positive outlook. Additionally, retail investors are expected to turn more positive to platinum with net coin and bar demand forecast to rise by 18% next year.
“Longer term, we are favourable to platinum, owing to its deficit market, and see the metal trending steadily higher,” Metals Focus said. “However, ample above-ground stocks will dampen the impact of these deficits in the short term, and platinum’s entrenched rangebound trend is likely to remain a barrier to any significant price breakout.”
Although some investors have lost faith in the metal after investing prematurely for the hydrogen narrative (which has been slower to materialise than expected), renewed hope stems from this potential. This, combined with weakening BEV sales and platinum’s undervaluation relative to gold, will offer long-term investors new optimism.
Therefore, Metals Focus forecasts an annual average price of $1,070 in 2025. This represents a 13% rise but is still within its current trading range, with potential breakout highs of $1,200. Alongside gold’s later retracement, Metals Focus expects the platinum-gold spread to narrow to $1,260 by Q4.25, down from its current all-time high of over $1,600.
Technical analysis on platinum price trend
Looking at the analysis of the platinum price now from Trend Intelligence, we can see some further reinforcement of the Metals Focus findings. In the first chart below we see the platinum price moving above two of Trend’s moving averages, but the averages remain organised in a fully negative configuration – the shorter average is below the median and long term averages. The platinum price is trading within the Japanese Cloud indicator as well, and its delay line has broken above the cloud. The most recent Japanese average candle is green. Overall this represents a neutral trend.
The second chart is the D* Momentum Indicator, which is positive for platinum; the negative D* line is below the positive green line.
The third chart, the R* Momentum Indicator, is negative, while the white signal line is positive. The data points are trending downwards. This looks to be another neutral indicator for platinum.
The final indicator is the M* Momentum, which is also neutral, as the fast red M* line is above the white signal line, but below the zero cut-off.
Overall, Trend Intelligence sees the long-term view for platinum as a continuation of the weak/neutral trend. This summary shows price action operating above two of the moving averages and within the Japanese Cloud. Most of the momentum indicators are producing neutral signals.
Significant and sustained short-term changes in price can positively or negatively impact the long-term trend.
