Platinum's Rally: Is Now the Time to Invest in the "Pandemic Laggard"?

The platinum market has staged a remarkable comeback in 2025, with prices surging over 20% year-to-date to a two-year high of $1,096.40 per ounce as of May 29, according to an InvestingHaven market overview. This rally, driven by structural supply deficits and a surge in Chinese investment demand, has reignited interest in the "pandemic laggard." But is now the time to invest? To answer this, we must dissect the recovery dynamics in industrial and automotive demand post-2025 economic rebound, where divergent forces are reshaping the metal's fortunes.

Automotive Demand: A Tale of Two Technologies

The automotive sector, historically the largest consumer of platinum (accounting for ~40% of demand, according to the Global Growth Insights market report), is undergoing a seismic shift. Battery electric vehicles (BEVs) are eroding platinum's traditional role in catalytic converters, with global automotive use projected to contract by 5% in 2025 compared to 2024 levels, the InvestingHaven analysis shows. This decline reflects automakers' earlier miscalculations about the pace of electrification, which left them under-inventoried in platinum group metals, the Global Growth Insights report found.

Yet, the story is not entirely bleak. Hybrid vehicles, which still rely on platinum-based catalytic converters, are providing a stabilizing force. Meanwhile, hydrogen fuel cell technology-a niche but growing segment-is creating new demand. The World Platinum Investment Council (WPIC) forecasts automotive platinum use will reach an eight-year high of 3 million ounces in 2025, in its WPIC forecast, driven by stricter emission regulations and the industry's pivot toward cleaner technologies. This duality-decline in one area, growth in another-highlights the sector's complex role in platinum's recovery.

Industrial Demand: A Quiet Engine of Growth

While automotive demand is polarizing, industrial applications are quietly bolstering platinum's case. Capacity expansions in chemicals, fiberglass, biofuels, and synthetic fuels are driving modest but steady growth in industrial platinum consumption, as noted in the InvestingHaven piece. These sectors benefit from platinum's catalytic efficiency, particularly in processes like hydrogen production and green ammonia synthesis.

The rise of green hydrogen, a cornerstone of decarbonization strategies, is especially noteworthy. Platinum's role in hydrogen fuel cells and electrolyzers is gaining traction, with analysts noting its growing importance in clean energy technologies in the Global Growth Insights analysis. This industrial renaissance, though less headline-grabbing than automotive trends, provides a critical underpinning for long-term demand.

Supply Constraints and the Deficit Narrative

The current rally is also fueled by a persistent supply deficit. Johnson Matthey's 2025 PGM Market Report highlights a market deficit of approximately 848,000 ounces for the year, the InvestingHaven coverage reports, the third consecutive year of undersupply. Primary platinum production is constrained by mine closures in South Africa and Russia, while recycling efforts, though rising by 6% in 2025 according to an InvestorsHangout forecast, remain insufficient to offset the gap.

Chinese demand further tightens the market. Retail investment in platinum bars and coins has surged, with smaller platinum bars seeing a 140% increase in purchases, the InvestingHaven article notes. This domestic appetite, coupled with geopolitical tensions disrupting global supply chains, has amplified price pressures.

Investment Considerations: Risks and Opportunities

For investors, platinum's rally presents both allure and caution. On the upside, the structural deficit and China's growing role as a consumer and investor offer a bullish case. The WPIC's forecast of a $532.6 million global platinum market in 2025 (up from $522.7 million in 2024), as reported by Global Growth Insights, underscores the metal's resilience.

However, risks loom. Macquarie analysts warn that beyond 2025, automotive demand could face a structural hit as BEVs dominate, a concern highlighted in the WPIC coverage hosted on EquityAxis. Price volatility, driven by speculative trading and geopolitical uncertainties, adds another layer of complexity. Investors must weigh these factors against platinum's long-term role in clean energy transitions.

Conclusion: A Calculated Bet

Platinum's 2025 rally is a product of both cyclical and structural forces. While automotive demand is fracturing, industrial applications and investment demand are providing a floor. For now, the market deficit and China's voracious appetite justify the current price surge. However, the metal's future hinges on the pace of EV adoption and the scalability of green hydrogen technologies. Investors willing to tolerate short-term volatility may find value in platinum's dual role as a clean energy enabler and a scarce commodity. But patience-and a close watch on supply chain developments-will be key.