The platinum market recorded a surplus in the second quarter of the year, for the second successive quarter, at 244 000 oz, industry organisation the World Platinum Investment Council’s (WPIC’s) latest ‘Platinum Quarterly’ shows.

Total supply was broadly stable year-on-year at 1.91-million ounces (up 1%), while total demand fell by 16% (308 000 oz) year-on-year to 1.66-million ounces.

Exchange-traded fund (ETF) outflows of 234 000 oz, resulting in net disinvestment of 121 000 oz, were the single largest factor behind the quarterly surplus.

Meanwhile, industrial demand growth of 6% year-on-year to 600 000 oz could not offset weaker-than-expected jewellery demand, which was down 32% year-on-year to 456 000 oz, and softer year-on-year automotive demand of 729 000 oz.

For the full-year, a platinum market surplus of 265 000 oz is forecast as ETF outflows reverse, partially offsetting the 548 000 oz surplus in the first half of the year.

Total supply is projected to increase by 2% year-on-year to 7.35-million ounces on the back of recycling growth.

Total demand is forecast to fall by 18% year-on-year to 7.09-million ounces, principally owing to significantly lower investment demand compared with the prior year.

The impact of the anticipated modest surplus this year in above ground stocks (AGS) is mitigated by a prior-year adjustment, which has resulted in the estimated 2025 deficit deepening to 1.44-million ounces.

The revised 2025 deficit to over 1.4-million ounces further depletes AGS. Even with the forecast that AGS would increase to 2.01-million ounces by year-end, they will remain at just 3.4 months’ cover to meet global demand by the end of the year.

Recycling is set to provide all of the 2% growth in total platinum supply forecast for the year.

In the second quarter, total mine supply fell by 2% year-on-year to 1.44-million ounces.

Recycling grew by 9% year-on-year to 466 000 oz, with stronger autocatalyst and industrial recycling more than offsetting a sharp decline in jewellery scrap.

For the full-year, mine supply is expected to be broadly flat year-on-year at 5.55-million ounces as modest gains in South Africa are offset by declines elsewhere.

Recycling is forecast to rise by 8% year-on year to 1.8-million ounces, moderating over the second half of the year after a strong price-related start to the year.

Oil price volatility and wider inflationary pressures associated with the US-Iran conflict have contributed to a lowering of expected light-duty vehicle production which is now projected to decline by 1% year-on-year this year, with the contraction concentrated on catalysed vehicles.

Consequently, the outlook for automotive demand this year for platinum has weakened, although trends are increasingly differentiated by region.

As a result, global automotive platinum demand is forecast to fall by 4% year-on-year to 2.9-million ounces, a relatively modest downgrade on the WPIC’s previous forecast.

Higher precious metals prices and cost of living concerns continue to impact jewellery demand.

For the full-year, platinum jewellery demand is forecast to decline by 15% year-on-year to 1.88-million ounces. The contraction is concentrated in China, where the reversal of last year’s inventory build, weak consumer demand and a renewed trade preference for gold are expected to drive a sharp fall in fabrication.

Meanwhile, the forecast for industrial demand growth has been upgraded on AI-related glass and electrical applications.

For the full-year, a 5% year-on-year increase in industrial demand to 2.39-million ounces is forecast, an uplift of 7% from the WPIC’s previous forecast as AI applications boost both glass and electrical demand.

Year-on-year growth in glass demand (23% or 98 000 oz); chemical demand (9% or 50 000 oz); medical demand (4% or 11 000 oz); electrical demand (19% or 19 000 oz); and hydrogen demand (8% or 6 000 oz) would more than offset lower petroleum demand (-28% or -50 000 oz).

The latter is being negatively impacted by the ongoing disruption to shipping in the Strait of Hormuz, while Russia’s refining sector is under pressure owing to drone attacks by Ukraine.

The geopolitical and macroeconomic landscape hampered platinum and the broader precious metals complex in the period, as investors saw prices decline amid expectations of a higher interest rate environment.

This manifested itself in 234 000 oz of ETF liquidations and a significant year-on-year drop in bar and coin demand (-71% or -91 000 oz).

Overall, the quarter saw net disinvestment of 121 000 oz. Full-year net disinvestment is projected to be 83 000 oz.

While ETF inflows are forecast for the second half of the year, these will only partially offset the substantive liquidations experienced during the first six months of the year, resulting in a forecast net outflow from ETFs of 389 000 oz for the full-year.

Similarly, exchange stocks are expected to unwind by 112 000 oz in the full-year, reflecting a partial reversal of last year’s sharp stock build as tariff fears recede.

Meanwhile, platinum bar and coin investment is forecast to fall by 22% to 313 000 oz in the full-year, with some recovery expected in most markets.

“The modest forecast surplus in 2026 should be viewed in the context of the macroeconomic headwinds seen in the first half of this year. Many areas of platinum demand continue to demonstrate resilience. Automotive demand remains comparatively robust and industrial demand has strengthened further, with global developments in AI highlighting platinum’s increasingly important role.

“China has earmarked nearly $300-billion for AI infrastructure development through 2030, together with the US privately funded buildout of AI technology, currently estimated at $500-billion, creating new demand for platinum group metals across a range of applications. This is an exciting time for the sector that we will be watching closely,” says WPIC CEO Trevor Raymond.