Platinum deficit beckons in second half as ETF selling eases

THE platinum market is expected to swing back into deficit in the second half of 2026 as heavy exchange-traded fund (ETF) selling eases, after investment outflows helped drive a first-half surplus.

Platinum recorded a 244,000 ounce surplus in the second quarter of this year, taking the first-half surplus to 548,000 oz, said the World Platinum Investment Council’s (WPIC’s) latest Platinum Quarterly report.

However, the WPIC forecasts a 283,000 oz deficit in the second half of the year, as platinum demand rises 24% half-on-half to 3.931 million oz and supply remains broadly stable.

WPIC research director Edward Sterck says the turnaround does not require strong investment demand, but simply an easing in ETF selling.

“The key point is that we don’t see all the ETF selling that we had in the first half,” he told Miningmx in an interview.

Rather than a sharp turnaround, Sterck described the forecast as “more of a sort of a cessation of the selling”, adding that the WPIC’s expectations are “fairly conservative”.

Investment demand was weak in the second quarter with outflows of 121,000 oz. ETF holdings fell by 234,000 oz, while bar and coin demand fell 71% year on year.

Macros support investment

Sterck said platinum and other precious metals are being heavily influenced by the macroeconomic environment.

Despite concerns over inflation, the Middle East conflict and the possibility of further US interest-rate increases, the factors behind the surge in precious-metals interest in late 2025 have not disappeared.

These include concerns around the dollar, the independence of the US Federal Reserve, the federal balance sheet and continuing fiscal deficits.

“It creates potentially a fairly constructive scenario for precious metals through the rest of this year and into next year, almost regardless of what the Fed does,” Sterck said.

The WPIC described platinum as a “higher-beta alternative” to gold. Sterck said platinum’s beta to gold, based on past relative performance, is about 1.3 times.

“If you’ve got an environment where these metals are moving higher from a price perspective, then you’d expect on average platinum to outperform gold by 30%,” he adds.

However, he cautions that “the same is true if prices go lower … it does work both ways”.

SA supply growth ‘not transformative’

While higher platinum group metal prices have improved mining economics, Sterck does not expect a dramatic increase in South African supply.

South African platinum production increased 19% year-on-year in the first half of 2026. However, output is expected to decline in the second half, leaving full-year production up just 1%.

Sterck said that about 15 months ago, the expectation would have been for “longer-term gradual erosion” of South African output, but that scenario was “probably not in play right now”.

“We are looking at an environment where mine supply is probably pretty well supported by mine economics at current levels,” he said.

“We could even see, over a multi-year period, perhaps some modest increases to supply. But I don’t think we’re going to see anything transformative.”

The strong first-half performance largely reflected Amandelbult’s return to full operations following flooding in 2025.

Second half production will also be affected by Valterra Platinum moving processing maintenance from the first half to the second half to reduce the impact of higher winter electricity tariffs.

Globally, mine supply is expected to remain broadly unchanged at 5.551 million oz, as modest gains in South Africa are offset by declines elsewhere.

Recycling to peak

Recycling, meanwhile, is forecast to rise 8% to 1.802 million oz this year, helping lift total platinum supply 2% to 7,35 million ounces.

Sterck said higher prices have encouraged recyclers to process spent catalytic converters that were previously stockpiled when PGM prices made them uneconomic to process.

However, the increasing appearance of older catalytic converters containing less PGM material could indicate those stockpiles are being depleted.

“The fact that we’re seeing older catalytic converters with less PGM content suggests to me we’re probably getting towards the end of those stockpiles,” he says, stressing this was a view rather than a firm forecast.

WPIC’s longer-term numbers currently see recycling supply peaking next year or the year after, although recycling could continue to grow before reaching that point.

For 2026 as a whole, the platinum market is forecast to record a 265,000 oz surplus, compared with a previously forecast 297,000 oz deficit. The revision is almost entirely due to a 601,000 oz reduction in expected investment demand.

Total platinum demand is forecast to fall 18% this year to 7.089 million oz. Jewellery demand is expected to decline 15% to 1.883 million oz, while automotive demand is forecast to fall 4% to 2.904 million oz.

Industrial demand, however, is forecast to rise 5% to 2.385 million oz.

AI factor

Artificial intelligence could also provide a new source of platinum demand, with uses ranging from high-end semiconductor production to platinum-iridium crucibles used to grow crystals for optical interconnects in data centres.

The report forecasts platinum demand from electrical applications to rise 19% this year and glass demand to increase 23%.

Sterck said many of these applications have only emerged towards the end of the second quarter and WPIC is still assessing their potential impact. “We know it’s going to push demand, but we don’t know by how much.”

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