The World Platinum Investment Council (WPIC) has recently released a report forecasting a significant shift in the platinum market by 2026. After three consecutive years of supply deficits, the market is expected to reach a balance, driven by increased recycling and a notable decline in investment demand. This article delves into the key factors influencing this transition, the implications for the platinum market, and the broader context of supply and demand dynamics.
Declining Investment Demand
One of the most striking predictions from the WPIC is a staggering 52% drop in investment demand for platinum by 2026. This decline is attributed to several factors, including easing U.S. trade tensions and profit-taking by investors. The WPIC estimates that of the total projected decline of 437,000 ounces in platinum demand, a significant 385,000 ounces will come from the investment sector alone.
The report emphasizes that while the security of critical mineral supplies and increased allocations to hard assets will continue to be relevant, the reduction in investment demand is the primary driver of the anticipated market balance in 2026. This shift reflects a broader trend in the investment landscape, where fluctuating geopolitical conditions and market sentiments can significantly impact demand for precious metals.
Supply Dynamics: Recycling and Mining
On the supply side, the WPIC forecasts a 10% increase in platinum recycling, alongside a 2% rise in primary mine supply. This recovery comes after major disruptions in 2025, leading to an overall total supply increase of 4%. The council predicts a surplus of approximately 20,000 ounces in 2026, marking a significant turnaround from previous years of deficit.
The increase in recycling is particularly noteworthy, as it underscores the growing importance of sustainable practices in the platinum industry. As the market adapts to changing demands, recycling will play a crucial role in meeting supply needs without the environmental impact associated with traditional mining.
The Impact of Trade Tensions and Automotive Demand
The WPIC’s head of research, Ed Sterck, acknowledged that the council’s projections may carry a degree of conservatism. He suggested that if trade tensions persist and exchange-traded fund (ETF) holders maintain their positions, a deficit of 300,000 ounces could still be possible in the coming year. This highlights the delicate balance between supply and demand, influenced by external factors such as geopolitical relations.
Additionally, the report notes that certain themes from 2025, including constrained mined supply and a decline in automotive demand, are likely to carry over into 2026. The slower-than-expected adoption of electric vehicles (EVs) has impacted demand for platinum, traditionally used in catalytic converters. However, the inevitable shift towards electrification in the automotive sector suggests that the demand landscape will continue to evolve.
Revising 2025 Forecasts
In light of recent developments, the WPIC has revised its 2025 supply deficit forecast down by 158,000 ounces to 692,000 ounces. This adjustment is partly due to a better-than-anticipated recovery in mined supply from South Africa, where total supply is expected to increase by 2% to 7.1 million ounces. However, total demand is projected to decline by 5% to 7.8 million ounces, primarily due to weaker industrial demand.
Despite improvements in mine supply in the latter half of 2025, challenges remain. Heavy rains in the first quarter disrupted operations, leading to a forecasted 5% decrease in mined supply for the year. This highlights the vulnerability of mining operations to environmental factors, which can significantly impact production levels.
The Future of South African Mining
A recent report by RMB Morgan Stanley indicates that South African mine production of platinum group metals (PGMs) is expected to decline by 5.5% over the next five years compared to 2024 levels. While higher PGM prices may provide some opportunities for life-of-mine extensions and project restarts, such as Impala Platinum’s Two Rivers Merensky project, these initiatives are unlikely to fully offset the depletion of existing mines.
Sterck further elaborated on the challenges facing major mines, noting their inherent inflexibility due to their deep and complex geological structures. This limitation restricts the ability to quickly adjust output in response to changing market conditions, underscoring the need for strategic planning in the industry.
Conclusion: A New Era for Platinum
As the platinum market approaches a balanced state by 2026, the interplay between supply and demand will remain critical. The anticipated decline in investment demand, coupled with increased recycling and a modest recovery in mining, sets the stage for a transformative period in the platinum industry. Stakeholders must navigate the complexities of geopolitical influences, technological advancements in the automotive sector, and environmental considerations to ensure a sustainable and profitable future for platinum.
In summary, while challenges persist, the outlook for platinum is evolving, and the industry must adapt to meet the demands of a changing world.
English 