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Informist, Friday, Jul. 4, 2025

 

MUMBAI – Despite a sharp rise in prices, platinum market is not likely see any change in demand for and supply of the metal, as both the factors are inelastic to prices, according to World Platinum Investment Council.

 

Platinum prices recently reached a 10-year high, exceeding $1,420 per ounce as of Jun. 26. This followed a prolonged period when platinum's price was stuck in a range of $900-$1,100 per ounce.

 

The platinum market is expected to record its third successive shortfall this year at 966,000 ounce after it was in deficit of 992,000 ounce in 2024 and 896,000 ounces in 2023, the council said in a release Thursday.

 

However, the council said platinum price rally is unlikely to dampen demand or stimulate miners to produce additional metal. This is due to the price inelastic relationship between price of platinum and its demand or supply.

 

"In the platinum market, supply will continue to lag demand, resulting in a structural deficit," it observed.

 

"Platinum supply remains challenged, both in terms of primary mining and secondary recycling supply. At the same time, the demand outlook is robust. Demand for hybrid vehicles and slower-than-expected battery electric vehicle adoption is supportive of platinum automotive demand, while strong demand growth in both investment and jewellery is being experienced in China," it pointed out.

 

The council quoted historical data to support its view of inelasticity. Historical movements in the platinum price did not trigger an immediate change in supply or demand, with responses often lagging by several years, it said.

 

 

Supply cannot increase overnight in response to a sharp rise in prices because developing new mines is a long process. "Most mines require eight to nine years to reach full production capacity, and investment decisions must take into account not only platinum's price potential, but also that of the overall platinum group metals basket plus base-metal by-products," it said.

 

On other side, demand too is unlikely to fall with rise in prices, the council argued, pointing out that across the automotive, jewellery and industrial sectors, platinum consumption has historically shown limited volatility in relation to short-term price movements.

 

"Between 2003 and 2008, for instance, automotive demand rose by over 25% even as prices climbed from around $600 to $2,000/oz, only falling after the global financial crisis precipitated a broader widespread commodity downturn."

 

While industrial demand has shown some delayed inverse relationship with price, volumes tend to adjust over multiple years. And although jewellery is structurally more elastic, platinum's relatively more attractive affordability against gold is now emerging as a counterforce, it said.

 

End

US$1 = INR 85.42

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

 

Reported by Abhijit Doshi

Edited by Akul Nishant Akhoury

 

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