Four consecutive years of shortages, with inventory only enough for 90 days: How much longer can the "scarcity story" of platinum continue?
2026-05-19 15:59:34
Despite regaining upward momentum earlier this month, the platinum market is still struggling within a wider range, with prices falling below $2,000 per ounce as London Platinum Week kicks off. However, the World Platinum Investment Council's first-quarter trends report, released Monday (May 18), suggests that platinum prices may be poised for a new round of increases due to a persistent supply gap, dwindling above-ground inventories, and renewed investor demand.
The World Platinum Investment Council (WIPO) predicts that the platinum market will experience its fourth consecutive year of supply deficit in 2026, with supply expected to fall short of demand by 297,000 ounces. By the end of 2026, above-ground inventories are projected to have fallen to just 1.747 million ounces – meaning global inventory will cover less than three months of demand.
Trevor Raymond, CEO of the World Platinum Investment Council, stated in the report: "Platinum's fundamentals remain attractive to investors. The market continues to be undersupplied, and platinum demand remains well protected despite geopolitical headwinds in the Middle East."
Edward Steker, research director at the World Platinum Investment Institute, told Kitco News that as concerns about global debt, inflation, and currency devaluation continue to rise, investors are increasingly focusing on tightening real fundamentals.
"One of the drivers of last year's platinum price surge was that above-ground inventories had fallen to unsustainably low levels," Strick noted. "We would need several years of significant surpluses to replenish those inventories." Despite a period of consolidation in recent months following a strong rally earlier this year, Strick believes the core drivers behind the platinum bull market remain intact.
“We still face very tight supply. Demand is largely inelastic in terms of price – while demand in the automotive, industrial, and jewelry sectors has changed somewhat year-over-year, the changes have not been dramatic,” he said.
The World Platinum Investment Council's latest quarterly report shows that total platinum demand is projected to decline by 9% to 7.674 million ounces in 2026, primarily due to the unlikely repeat of last year's significant inflows into ETFs and exchange inventories. However, physical investment demand remains strong, with demand for gold bars and coins expected to jump 27% to 718,000 ounces, a six-year high.
Stoke stated that as investors seek alternatives to dollar-denominated assets, platinum's investment logic increasingly aligns with broader precious metal demand trends. "If you look at the precious metals sector, platinum is the metal with the tightest fundamentals. In a scenario where people are seeking alternative investments to the dollar, platinum offers the greatest leverage."
Industrial demand continues to provide strong support for platinum consumption. The World Platinum Investment Council forecasts that industrial demand will grow by 9% to 2.238 million ounces this year, mainly driven by a strong rebound in capacity expansion in the glass manufacturing industry.
Meanwhile, demand for platinum associated with artificial intelligence infrastructure is becoming a growing long-term trend. Stokes stated that platinum group metals are indispensable raw materials in the production of specialty crystals used in semiconductors, optical communications, and data centers. "With current technology, these data centers cannot exist without platinum and platinum group metals. China alone likely consumed 250,000 ounces of platinum for these crucibles last year." Although most of these metals are recyclable, Stokes said the widespread deployment of AI is adding another layer of structural demand to an already undersupplied market.
Hydrogen energy technology may also become an increasingly important source of platinum demand in the future, especially given that governments are prioritizing regional energy security due to geopolitical tensions and anti-globalization trends.
“Not everything can be electrified. You can’t use electricity to make steel, or to produce fertilizer or ammonia—you need hydrogen,” Stricker noted. He added that increased investment in renewable energy infrastructure and green hydrogen production, even if it doesn’t have a substantial impact on this year’s forecasts, could be a significant driver of platinum demand in the coming years.
Despite ongoing concerns about slowing economic growth and instability in the Middle East, Stokes believes platinum demand remains relatively resilient. "I think platinum demand is relatively well-positioned to withstand a recession. While automotive production does face risks if supply chains are disrupted, industrial and investment demand could act as a hedge."
The World Platinum Investment Council also expects automotive platinum demand to remain stable, supported by growth in hybrid vehicles and demand for heavy-duty vehicles in the US and India. Despite a decline in internal combustion engine vehicle production, automotive platinum demand is projected to fall by only 2% to 2.959 million ounces this year.
Meanwhile, supply growth remains constrained. The World Platinum Investment Council forecasts that mineral supply will remain largely flat at 5.551 million ounces in 2026, with modest growth in South Africa offset by declines in other regions. Recycled supply is expected to grow by 9%, but recyclers still face operational and financial constraints.
In summary, the World Platinum Investment Council believes that the combination of limited supply, shrinking inventories, and increased investor awareness indicates that the platinum bull market may still be in its early stages. Stricker summarized, "I think investors aren't currently focused on specific price levels; they're looking for trends." For the platinum market, the fourth consecutive year of supply deficit, less than three months of above-ground inventory, persistently strong physical investment demand, and emerging demand sources such as AI and hydrogen energy collectively form the structural foundation supporting platinum prices.
A supply shortage will occur for the fourth consecutive year in 2026, with above-ground inventory expected to drop to less than three months' worth.
The World Platinum Investment Council (WIPO) predicts that the platinum market will experience its fourth consecutive year of supply deficit in 2026, with supply expected to fall short of demand by 297,000 ounces. By the end of 2026, above-ground inventories are projected to have fallen to just 1.747 million ounces – meaning global inventory will cover less than three months of demand.
Trevor Raymond, CEO of the World Platinum Investment Council, stated in the report: "Platinum's fundamentals remain attractive to investors. The market continues to be undersupplied, and platinum demand remains well protected despite geopolitical headwinds in the Middle East."
Investors are focused on tightening physical fundamentals, but the logic behind the platinum bull market remains unchanged.
Edward Steker, research director at the World Platinum Investment Institute, told Kitco News that as concerns about global debt, inflation, and currency devaluation continue to rise, investors are increasingly focusing on tightening real fundamentals.
"One of the drivers of last year's platinum price surge was that above-ground inventories had fallen to unsustainably low levels," Strick noted. "We would need several years of significant surpluses to replenish those inventories." Despite a period of consolidation in recent months following a strong rally earlier this year, Strick believes the core drivers behind the platinum bull market remain intact.
“We still face very tight supply. Demand is largely inelastic in terms of price – while demand in the automotive, industrial, and jewelry sectors has changed somewhat year-over-year, the changes have not been dramatic,” he said.
Demand for physical investment is strong, with demand for gold bars and coins surging to a six-year high.
The World Platinum Investment Council's latest quarterly report shows that total platinum demand is projected to decline by 9% to 7.674 million ounces in 2026, primarily due to the unlikely repeat of last year's significant inflows into ETFs and exchange inventories. However, physical investment demand remains strong, with demand for gold bars and coins expected to jump 27% to 718,000 ounces, a six-year high.
Stoke stated that as investors seek alternatives to dollar-denominated assets, platinum's investment logic increasingly aligns with broader precious metal demand trends. "If you look at the precious metals sector, platinum is the metal with the tightest fundamentals. In a scenario where people are seeking alternative investments to the dollar, platinum offers the greatest leverage."
Strong industrial demand provides robust support, while AI infrastructure fosters new growth drivers.
Industrial demand continues to provide strong support for platinum consumption. The World Platinum Investment Council forecasts that industrial demand will grow by 9% to 2.238 million ounces this year, mainly driven by a strong rebound in capacity expansion in the glass manufacturing industry.
Meanwhile, demand for platinum associated with artificial intelligence infrastructure is becoming a growing long-term trend. Stokes stated that platinum group metals are indispensable raw materials in the production of specialty crystals used in semiconductors, optical communications, and data centers. "With current technology, these data centers cannot exist without platinum and platinum group metals. China alone likely consumed 250,000 ounces of platinum for these crucibles last year." Although most of these metals are recyclable, Stokes said the widespread deployment of AI is adding another layer of structural demand to an already undersupplied market.
Hydrogen energy technology is becoming a potential source of future demand.
Hydrogen energy technology may also become an increasingly important source of platinum demand in the future, especially given that governments are prioritizing regional energy security due to geopolitical tensions and anti-globalization trends.
“Not everything can be electrified. You can’t use electricity to make steel, or to produce fertilizer or ammonia—you need hydrogen,” Stricker noted. He added that increased investment in renewable energy infrastructure and green hydrogen production, even if it doesn’t have a substantial impact on this year’s forecasts, could be a significant driver of platinum demand in the coming years.
Demand for automobiles and recycling remains stable, while supply growth is limited.
Despite ongoing concerns about slowing economic growth and instability in the Middle East, Stokes believes platinum demand remains relatively resilient. "I think platinum demand is relatively well-positioned to withstand a recession. While automotive production does face risks if supply chains are disrupted, industrial and investment demand could act as a hedge."
The World Platinum Investment Council also expects automotive platinum demand to remain stable, supported by growth in hybrid vehicles and demand for heavy-duty vehicles in the US and India. Despite a decline in internal combustion engine vehicle production, automotive platinum demand is projected to fall by only 2% to 2.959 million ounces this year.
Meanwhile, supply growth remains constrained. The World Platinum Investment Council forecasts that mineral supply will remain largely flat at 5.551 million ounces in 2026, with modest growth in South Africa offset by declines in other regions. Recycled supply is expected to grow by 9%, but recyclers still face operational and financial constraints.
With both tight supply and resilient demand, the platinum bull market may still be in its early stages.
In summary, the World Platinum Investment Council believes that the combination of limited supply, shrinking inventories, and increased investor awareness indicates that the platinum bull market may still be in its early stages. Stricker summarized, "I think investors aren't currently focused on specific price levels; they're looking for trends." For the platinum market, the fourth consecutive year of supply deficit, less than three months of above-ground inventory, persistently strong physical investment demand, and emerging demand sources such as AI and hydrogen energy collectively form the structural foundation supporting platinum prices.
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