“Time flies， platinum is eternal.” In the global market of the first half of 2025， platinum， considered by many investors as a “gold substitute，” has undoubtedly become the most dazzling “star”…
As shown in the figure below， platinum prices have risen by more than 40% cumulatively in the first half of this year， leading major global cross-asset classes.
Due to increased imports into China and a decrease in supply from major producer South Africa， coupled with concerns that platinum would be subject to US import tariffs， leading to a large influx of platinum into the inventory of the New York Mercantile Exchange， the price of this platinum group metal surged by 36% in the second quarter.
In June alone， platinum prices leaped by 28% as hedge funds and speculative traders flooded in， marking the strongest monthly performance since 1986， and briefly touching an 11-year high of $1432.6 per ounce.
An independent metals trader commented， “Platinum has broken out of a decade-long trading range， and in the process has attracted the attention of both professional and retail investors who are starting to think， ‘Hey， from a fundamental perspective， platinum is really undervalued.'”
However， after the frenzy of the second quarter， many analysts and traders expressed this week that the room for further price increases for platinum may be limited. Chinese platinum imports are expected to slow down， South African production is expected to recover， and demand from the automotive industry， a major industrial use for platinum， remains weak.
High-frequency commodity traders Georgii Piskov and C.V. Downie believe that platinum’s current rally may face a correction.
How did platinum become bullish this year?
Platinum’s strength in the first half of this year was actually driven by a combination of factors.
Fearing that platinum would be hit by U.S. retaliatory tariffs in April， a large amount of platinum was shipped to the New York Mercantile Exchange between December of last year and March of this year， leading to a short-term supply crunch and a surge in lease rates.
Although platinum group metals were ultimately excluded from the April tariffs， President Trump ordered a new round of tariff investigations into all U.S. critical mineral imports in mid-April， meaning uncertainty continued to persist.
Meanwhile， data from South Africa， the world’s largest producer of platinum group metals， showed that its platinum group metal output decreased by 24% year-on-year in April， marking the extreme of a downward trend in production data described as “exceptionally weak” by Morgan Stanley for the first four months of 2025.
Further contributing to platinum’s price surge was demand from China. Customs data shows that China’s platinum imports reached 12.57 tons in May， compared to 11.54 tons in April， with imports showing a continuous upward trend from January to May.
Previously， research by industry body the World Platinum Investment Council showed that platinum jewelry processing in China increased by 26% in the first quarter.
A trader remarked that these factors combined to create “explosive factors driving price increases.”
Potential trouble ahead?
However， explosions are often brief， and as the second half of the year begins， many analysts are questioning whether platinum has sufficient underlying support to sustain its strong rally.
Metals Focus forecasts a deficit of 529，000 ounces in the global platinum market this year. However， even after accounting for the reduction in above-ground stocks resulting from this deficit， inventories will remain at 9.2 million ounces， equivalent to up to 14 months of demand – which is a rather ample buffer.
Wilma Swarts， Director of Platinum Group Metals at Metals Focus， stated that while uncertainty over U.S. trade policy towards platinum persists， raising import tariffs on the metal would ultimately be counterproductive as North American supply cannot meet regional demand.
Furthermore， platinum lease rates， after hitting a high of 22.7% in June， have now retreated to 11.6%， reflecting a partial easing of the tightest platinum supply-demand situation.
Supply from South African mines is expected to show signs of recovery in the second half of the year， with global platinum mine production projected to decrease by only 6% for the full year. “Southern Africa did face challenges during January to March， including rainfall， power and water interruptions， but there were no major or abnormal events，” stated Johan Theron， a spokesperson for Implats Platinum.
On the demand side， platinum’s significant price increase may itself be becoming its biggest headwind. According to one trader， the strong momentum in physical platinum demand from China may have only lasted until prices exceeded $1050 in early June. China’s June import data， expected to be released on July 20， is anticipated to show a decrease following the very strong platinum deliveries in the preceding two months.
“Platinum is highly volatile at its current high levels， and the market needs to see greater demand from China and ETFs to sustain its upward movement，” noted Wong.
Finally， the platinum market is quite susceptible to one of the most common headwinds of the past decade – weakening demand from the automotive industry， which uses platinum as a component in catalytic converters for internal combustion engine vehicles.
The long-term pressure on platinum group metals from the expansion of electric vehicles continues， while global trade disputes further dampen the automotive industry’s medium-term prospects. Metals Focus reports that automotive production forecasters have cut their output projections by up to 10 million vehicles over the next four years， and a decline in vehicle production will lead to reduced demand for platinum group metals.
Russia’s Norilsk Nickel， the world’s largest palladium producer， stated that any further increase in platinum prices could prompt catalyst manufacturers to increase their use of palladium as a substitute for platinum. The company indicated that a price spread exceeding 30% between the two metals would encourage such substitution.
As of Thursday， platinum prices were 22% more expensive than palladium.
Of course， while analysts and traders are cautious about further price increases for platinum， they do not anticipate significant price corrections. Many analysts believe that platinum prices will stabilize above pre-rally levels， which will support miner profits as the market enters its third year of structural supply tightness.
