The surge in commodity prices appears to be spreading. Following gold and silver, platinum has now joined the rally.
On December 15, the main platinum futures contract on the Guangzhou Futures Exchange hit its daily limit-up, soaring 7% intraday—marking its first limit-up since listing. Meanwhile, the main palladium futures contract also surged 5%.
Notably, international platinum prices have surged 93% year-to-date, making it one of the best-performing commodities this year and drawing significant market attention.
Analysts suggest this platinum rally is not driven by short-term sentiment. The platinum-palladium market has faced supply deficits and low inventories for years. With increasing demand from automotive catalysts and emerging applications like hydrogen energy, platinum and palladium may be at the start of a major revaluation.
**First Limit-Up Since Listing: Platinum Steals the Spotlight** Since their debut on November 27, platinum and palladium futures have traded steadily, with active initial volumes tapering off later.
On December 15, the main platinum contract surged early and hit limit-up in the afternoon, closing at 482.4 yuan/gram (+7%) with trading volume spiking to 41,800 lots. Palladium futures also jumped over 5% intraday, settling at 407.6 yuan/gram (+4.73%).
Globally, platinum prices have broken out of a multi-year downtrend, climbing 93% this year.
FXEmpire analyst Muhammad Umair attributes the rally to rising industrial demand and tightening supply. The recovery in fuel-powered vehicles is boosting demand, while South Africa—contributing over 70% of global platinum output—faces power shortages, aging mines, and rising costs.
Umair predicts platinum could reach $2,170–$2,300/oz by 2026, well above Wall Street’s median forecast of $1,550–$1,670/oz for next year.
Huishang Futures analyst Cong Shanshan notes that platinum and palladium, as industrial precious metals, are more sensitive to fundamentals. With stable fundamentals, macro factors like the Fed’s dovish rate-cut stance may drive short-term price movements. Rising gold and silver prices also lend support, though substitution risks at high prices warrant caution.
**Persistent Supply Squeeze and Low Inventories** The core driver of platinum’s strength lies in prolonged supply constraints.
Global platinum supply has steadily declined, with 2024 output at 227.4 tons—down sharply from 258.4 tons in 2021—per World Platinum Investment Council (WPIC) data. Mining accounts for 75% of supply, totaling 179.8 tons in 2024, while recycling contributed 47.6 tons (20.9%).
Xinhu Futures highlights structural deficits due to constrained mine capacity (especially in North America) and insufficient capital expenditure. While traditional auto sales drag, higher platinum loadings in catalysts and hydrogen energy applications provide demand support, likely sustaining price gains.
Palladium’s supply dynamics differ slightly, with 2024 output up 3.6% to 292.84 tons (70.4% from mining). However, platinum-group metals broadly face limited reserves and inelastic supply.
Xinhu adds that palladium inventories remain at multi-year lows, with geopolitical risks looming over Russia’s 40% supply share. Palladium ETF holdings, though trailing platinum, show growing investor interest, which may expand further with China’s new futures listings.
**Demand Resilience and Hydrogen Energy Potential** Amid tight supply, platinum demand remains robust.
WPIC estimates 2024 global platinum demand at 258.25 tons, exceeding supply. Automotive applications (37.4% of demand) lead, followed by industrial uses (30%).
Cong Shanshan notes hydrogen energy as a new growth driver, with platinum irreplaceable in fuel cells and electrolyzers. Investment demand is also rebounding as platinum gains appeal as a hybrid "safe-haven asset."
While structural deficits and hydrogen energy prospects support long-term upside, analysts caution that platinum’s smaller market size brings higher volatility than gold or silver, warranting vigilance against short-term pullbacks.
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