(Yicai) May 23 -- International investment demand for platinum surged in the first quarter of the year, boosted by a strong increase in bar and coin demand from China, according to a report by the World Platinum Investment Council.

Global investment demand for platinum rose 28 percent to 461 thousand ounces in the first quarter from the previous one, mainly driven by a sharp rise in exchange-held platinum stocks as tariff-related uncertainties and a widening location premium encouraged higher metal inflows into the United States, the WPIC said in its Platinum Quarterly Q1 2025 report released on May 19.

Investment bar and coin demand increased 17 percent to 70 koz in the period, as Chinese buying of platinum investment bars smaller than 500 grams reached a record high, growing 140 percent to 31 koz and offsetting declines in other regions, the WPIC noted.

“In April, Chinese jewelers and investors imported the highest volume of platinum in a year, with total platinum imports reaching 11.5 tons,” said Deng Weibin, head of Asia Pacific at the WPIC. “However, China’s platinum imports for the year ended April 30 were still 31 percent lower than a year earlier.”

Platinum futures traded on the New York Mercantile Exchange [NYMEX: PLW00] soared nearly 13 percent in the first quarter of the year. So far this year, they have climbed more than 20 percent to USD1,096.30.

In the three months ended March 31, global platinum demand rose 10 percent to 2,274 koz from a year earlier, mainly because of strong investment demand, which offset declines of 4 percent and 22 percent in automotive and industrial demand, respectively, according to WPIC data.

However, as platinum demand increased, the metal’s total supply shrank 10 percent to 1,458 koz, reflecting the seasonally weak mine production quarter that could not be offset by a modest recovery in recycling, the WPIC said. This resulted in a deficit of 816 koz, the largest single quarterly deficit in six years.

“The platinum market is in structural deficit, irrespective of the uncertainties posed by today’s geopolitics,” said Trevor Raymond, chief executive officer of the WPIC.

“We are seeing that platinum’s diversity of demand provides a significant degree of resilience even as the US government’s new approach to tariff policy starts to take effect,” he noted. “At the same time, it is widely recognized that platinum mine supply continues to face downside risks.”

2025 Forecast

In the Platinum Quarterly report, the WPIC also included a revised forecast for the year.

Supply decline will be a main theme for 2025, as the WPIC predicted a 4 percent drop in total supply to 6,000 koz from last year, the lowest in five years. Demand will likely fall by 4 percent to 7,965 koz in the period, as growth in jewelry and investment is not expected to fully offset declines in automotive and industrial demand.

“Nevertheless, this is 115 koz higher than our previous demand forecast, deepening the third successive annual deficit forecast for 2025 to 966 koz,” the WPIC noted.

“With over 300 koz of excess platinum stocks yet to be removed from NYMEX-approved warehouses, suggesting that market fears of further tariff risks remain, the broader impact of trade restrictions softening global economic activity is highly unlikely to materially reduce the 966 koz deficit forecast for 2025,” Raymond explained.

For the full year 2025, jewelry demand is expected to continue the recovery seen last year, increasing 5 percent to 2,114 koz, as platinum continues to benefit from its price discount relative to gold, according to the WPIC prediction.

Total investment demand is set to fall 2 percent to 688 koz this year from 2024 as the exceptional exchange inflows in the first quarter moderate. Bar and coin investment is forecast to strengthen by 30 percent to 252 koz, driven by a 48 percent growth in China and a return to growth in the North American market.

Automotive demand will likely fall only 2 percent to 3,052 koz this year from 2024. “Against the backdrop of slower-than-expected battery electric vehicle growth and with demand from light-duty vehicle production flat, a 2 percent increase in demand from non-road vehicles is expected to partially offset a 7 percent decline in heavy-duty automotive demand,” the WPIC noted.

Industrial demand for platinum is expected to plunge 15 percent to 2,111 koz in 2025 from last year, mainly due to anticipated reductions in glass demand.

Editor: Futura Costaglione