(Kitco News) - Despite renewed momentum at the start of the month, the platinum market continues to struggle within its broader range, with prices at the start of London’s historic platinum week back below $2,000 an ounce.
However, platinum prices could be poised for another leg higher as persistent supply deficits, dwindling above-ground inventories and renewed investor demand tighten an already constrained market, according to the World Platinum Investment Council (WPIC).
In its first-quarter trend reports, published Monday, the WPIC said the platinum market is heading for its fourth consecutive annual deficit in 2026, with supply expected to fall short of demand by 297,000 ounces. Above-ground stocks are forecast to decline to just 1.747 million ounces by year-end — representing less than three months of global demand coverage.
“Platinum’s fundamentals remain attractive to investors,” said Trevor Raymond, CEO of the WPIC in the report. “The market continues to be undersupplied, and, despite geopolitical headwinds in the Middle East, platinum demand is well insulated.”
In an interview with Kitco News, Edward Sterck, WPIC director of research, said investors are increasingly paying attention to tightening physical fundamentals as concerns over global debt, inflation and currency debasement continue to build.
“One of the motivating factors for the rally last year was the fact that above-ground stocks had fallen to unsustainably low levels,” Sterck said. “We’d really have to see several years of significant surpluses to restock those above-ground stocks.”
Although platinum prices have consolidated in recent months after a strong rally earlier this year, Sterck argued the core drivers behind the bull market remain intact.
“We’ve still got very constrained supply,” he said. “We’ve got demand that is largely price inelastic. Automotive, industrial and jewelry demand — there’s some changes year-on-year, but they’re not changing that drastically.”
The WPIC’s latest quarterly report showed total platinum demand is expected to fall 9% in 2026 to 7.674 million ounces, largely because last year’s significant ETF and exchange stock inflows are unlikely to repeat. However, physical investment demand remains robust, with bar and coin demand projected to jump 27% to a six-year high of 718,000 ounces.
Sterck said the investment case for platinum increasingly overlaps with broader precious metals demand trends as investors seek alternatives to U.S. dollar-denominated assets.
“If you look at the precious metal complex, platinum is the metal with the tighter market dynamics,” he said. “It offers the greatest leverage to a scenario where people are looking for alternative investments to the U.S. dollar.”
The WPIC noted that platinum’s market tightness is reflected in elevated lease rates and strong backwardation in over-the-counter forward markets.
While gold has traditionally dominated safe-haven flows, Sterck said platinum’s constrained supply profile gives it unique appeal.
“Do you want to hold something that’s a physical asset that’s tangibly worth something, or paper money that may or may not maintain its purchasing power?” he said.
Industrial demand also continues to provide strong support for platinum consumption. The WPIC forecasts industrial demand will rise 9% this year to 2.238 million ounces, led by a sharp rebound in glass manufacturing capacity expansions.
At the same time, platinum demand tied to artificial intelligence infrastructure is emerging as a growing long-term trend.
Sterck said platinum group metals are essential in the production of specialty crystals used in semiconductors, optical communications and data centers.
“These data centers can’t exist with current technology without platinum and the rest of the PGM complex,” he said. “China alone may have consumed a quarter-million ounces last year for these crucibles.”
Although much of that metal is recyclable, Sterck said the broader AI buildout is adding another layer of structural demand to an already undersupplied market.
Hydrogen technologies could also become an increasingly important source of future platinum demand as governments prioritize regional energy security in response to geopolitical tensions and deglobalization trends.
“You can’t electrify everything,” Sterck said. “You can’t reduce steel with electricity, and you can’t produce fertilizer or ammonia with electricity — you need hydrogen.”
He added that rising investment in renewable energy infrastructure and green hydrogen production could become a significant platinum demand driver over the next several years, even if it does not materially impact this year’s forecasts.
Despite ongoing concerns about slowing economic growth and Middle East instability, Sterck argued that platinum demand remains relatively resilient.
“I think the platinum demand profile is relatively recession-proof,” he said. “There are risks to automotive production if supply chains are disrupted, but industrial demand and investment demand would likely counterbalance that.”
The WPIC also expects automotive demand to remain stable, supported by hybrid vehicle growth and heavy-duty vehicle demand in the U.S. and India. Automotive platinum demand is forecast to decline only 2% this year to 2.959 million ounces despite weaker internal combustion engine production.
Meanwhile, supply growth remains limited. The WPIC forecasts mine supply will remain broadly flat in 2026 at 5.551 million ounces, with modest gains in South Africa offset by declines elsewhere. Recycling supply is expected to rise 9%, although recyclers continue to face operational and financial constraints.
For Sterck, the combination of constrained supply, shrinking inventories and growing investor awareness suggests platinum’s bull market may still be in its early stages.
“I don’t think investors are focused on price levels right now,” he said. “They’re looking for trends.”
