The long-term outlook for platinum group metals (PGMs) is continuing to strengthen as persistent supply deficits, resilient automotive demand, expanding industrial applications and constrained recycling volumes reinforce increasingly tight market fundamentals, according to the World Platinum Investment Council (WPIC).

According to WPIC research director Edward Sterck, the PGMs market continues to underestimate the breadth of the platinum demand profile, while overestimating the speed at which battery-electric vehicles (BEVs) will displace traditional automotive demand.

He says battery electrification continues to expand globally, but at a more measured pace than many earlier forecasts anticipated. As a result, internal combustion engine (ICE) vehicles, particularly hybrids, continue to support platinum demand for longer than previously expected.

At the same time, Sterck notes, tightening emissions regulations in major markets such as the EU and China require higher PGM loadings in ICE vehicle catalytic converters, further supporting demand.

Although automotive platinum demand is expected to decline over time, he says the market is likely to see a far more gradual reduction than many investors have priced in.

Beyond the automotive sector, industrial demand is emerging as one of the market’s most compelling growth stories, according to Sterck, who adds that platinum already plays a critical role in industries ranging from petroleum refining and glass manufacturing to pharmaceuticals.

However, he believes some newer technologies are creating additional sources of demand for PGMs. AI infrastructure development is an interesting occurrence, buoyed by rapid investment in global data centre infrastructure. This is driving demand for platinum across a growing number of applications, including e-glass yarn, thin-film coatings and optical crystal technologies used in high-performance data transmission.

In addition, because many of these applications were not widely recognised by the industry as recently as a year ago, it is difficult to quantity the full extent of AI-related platinum demand, says Sterck.

Hydrogen also remains one of PGM’s strongest long-term growth opportunities, he notes, adding that as countries expand renewable-energy generation and seek alternatives for sectors that cannot be directly electrified, green hydrogen is expected to become an increasingly important source of platinum demand throughout the 2030s.

PGMs Supply

While PGM demand continues to diversify, Sterck says supply remains constrained, with PGM market deficits persisting for several consecutive years, steadily reducing above-ground inventories to what the WPIC regards as unsustainably low levels. These structural deficits provide the foundation for the market’s longer-term outlook, he adds.

The recycling of PGMs offers some relief, notes Sterck – but only to a limited extent. In this regard, he says recycled PGM supply is expected to increase by about 10% this year as stronger prices improve the economics of recovering metal from end-of-life products.

However, Sterck cautions that recycling cannot expand indefinitely because future volumes are ultimately determined by the number of PGM-containing vehicles reaching the end of their service lives. With automotive platinum demand having peaked about two decades ago, he points out that most vehicles from that period have already entered the recycling stream, naturally limiting future growth in secondary supply of platinum. As a result, Sterck says recycled platinum is unlikely to close the projected supply gap over the coming decade.

In terms of PGMs pricing, he highlights that recent platinum price movements reflect two distinct market phases. The initial rally was driven primarily by tightening supply and demand fundamentals as consecutive market deficits and shrinking above-ground stocks raised expectations of higher long-term values. More recently, Sterck notes, broader macroeconomic and geopolitical developments have increasingly influenced prices, with PGMs also attracting attention as an alternative precious metal investment.

Nonetheless, even after prices moderate from earlier highs, Sterck says underlying market conditions remain tight. While significant PGMs released from exchange-traded funds helps ease pressure in the physical market, he says this additional supply merely balances the market rather than creating any meaningful surplus, reinforcing the view that PGMs availability remains constrained.

Looking ahead, Sterck says PGM lease rates remain one of the clearest indicators of physical market conditions, whereby higher lease rates generally signal shortages of available metal, while lower rates indicate greater availability. Combined with declining above-ground stocks, these indicators will help determine whether the market continues to track the WPIC’s forecast of sustained deficits through to 2030.

For investors and industry stakeholders, Sterck believes, the PGM story increasingly extends beyond its traditional automotive roots, whereby continued demand from hybrid vehicles, emerging AI applications, hydrogen technologies and established industrial sectors are broadening PGM’s demand base at a time when supply growth remains limited and recycling faces natural constraints.

Together, Sterck concludes, these factors continue to support the metal’s positive long-term market fundamentals.