Platinum prices hit highest level since August 2014
What's the story
Platinum prices have hit their highest level since August 2014, with spot platinum gaining by 0.1% to $1,458.80 per ounce on Friday. In India, the precious metal is priced at ₹4,043 per gram or ₹40,430 per 10gm. The rise in platinum prices is mainly due to tight supply and a structural deficit in the market.
Industrial significance
Surge in platinum futures
Platinum is one of the world's rarest metals and plays a critical role in several industries. It is used to make automotive catalytic converters, fine jewelry, petrochemicals, and new hydrogen technologies. The International Banker reports that platinum futures have surged by 60% this year on the New York Mercantile Exchange. Prices rose by nearly 40% in H1 and 28% in June alone due to strong demand amid tight supply conditions.
Supply shortage
Structural deficit and production cuts
The World Platinum Investment Council has warned that the market is facing its third consecutive year of large deficits, with a shortfall of nearly one million troy ounces (1 troy ounce = 31 grams) in an eight-million-ounce market. Edward Sterck, Research Director at WPIC, termed it a "structural deficit" and projected a 966,000-ounce shortfall for 2025. South Africa, the largest producer of platinum, has witnessed steep production cuts due to bad weather, mine breakdowns, and supply chain issues.
Supply challenges
Decline in recycling supply of platinum
The recycling supply of platinum is also on a decline, with above-ground stockpiles shrinking. These stockpiles can now cover less than four months of demand, which experts say is unsustainable if the current demand trend continues. The combination of these factors has contributed to the recent surge in platinum prices across global markets.