Platinum has emerged as one of the best-performing commodities in 2025, with prices surging over 47%. Beyond speculative investments, intensifying shortages have driven the interest, raising concerns from both industrial supply chains and financial markets. Tight physical availability, soaring lease rates, and uneven geographic stockpiles have forced refiners, automakers, and traders into a scramble for metal.
The core problem is Economics 101 – sustained demand outstripping accessible supply. Lease rates for platinum, reflecting the annualized return lenders receive for short-term loans, remain above 10%. They came down from a mid-July spike above 35%, but still stay far from the near-zero norm that defined the market in previous years. This leasing stress, previously rare in the platinum space, shows acute tightness and hoarding behavior among vault holders.
"When a market tightens like this, whether it's for good reasons, bad reasons, idiosyncratic reasons, it should pull material out of the shadows," Jay Tatum, co-founder of Valent Asset Management, said for Bloomberg. He added that current lease rates suggest the tightness isn't over.
China, already the largest consumer, imported a record 1.2 million ounces in the second quarter, more than its apparent usage, suggesting stockpiling or opaque buildup. Meanwhile, traders redirected vast amounts to US warehouses in response to tariff uncertainty and arbitrage pricing, leaving London and Zurich vaults drained. In just three weeks, New York absorbed nearly 290,000 ounces, even as ETFs saw net outflows of over 200,000 ounces year-to-date.
The market dynamics of platinum are reminiscent of the silver market, where the metal has a dual purpose. On one side, it is an investment, but on the other, an important industrial input, and it is industrial users that face the brunt of this disruption.
Unlike investors, they typically rely on leased metal, not outright purchases. The spike in lease costs is squeezing margins for manufacturers that use platinum in catalytic converters, chemical production, and electronics. Fundamentally, platinum's physical markets are facing long-term structural imbalances.
"Whilst the headline deficits are largely unchanged, it should be noted that this reflects a number of offsetting trends. For supply, we raised expectations for mine output, but this is offset by lower recycling supply expectations," the World Platinum Investment Council's latest five-year outlook noted.
On the supply side, Valterra Platinum (OTCPK: AGPPF) has entered the stage following its demerger from Anglo American. While it carries a robust long-term production portfolio, its latest interim results revealed a 12% decline in output due to February flooding at its Amandelbult operation. While the third quarter expects full production ramp-up, output guidance remains near the lower end of the range.
Despite rising prices and a demand surplus, the firm's CEO, Craig Miller, pointed out a high barrier between current conditions and a new supply.
"Prices would have to increase by about another 50% for you to incentivize new production," he clarified.
Price Watch: abrdn Physical Platinum Shares ETF (NYSE:PPLT) is up 44.41% year-to-date.
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