Platinum prices forecast: set to explode as supply deficit widens

Platinum prices continued rising this week after a report pointed to low production this year. It recovered to a high of $940 on Wednesday, higher than the year-to-date low of $837. It remains 17.45% below the highest point this year.

Platinum waning supply

The most recent report by the World Platinum Investment Council showed that supply will likely be under pressure in the near term. Total mining supply dropped by 4% in the third quarter from the previous quarter. Total mining supply came in at 1,418 koz as a drop in North America, Russia, and other was offset by an increase from Zimbabwe and South Africa.

At the same time, recycling supply also dropped in Q3. It dropped to 1,822 koz, down by 2% from the same quarter in 2022 and 3% from Q2. Therefore, the report estimates that platinum deficit will increase by 66 koz to 1,071 koz. This deficit will happen because of a supply shortfall of 13% as countries are expected to produce 7,079 koz. 

Further, platinum demand is expected to remain at an elevated level. The council expects that supply will jump by 26% to 8,150 koz. Most of this demand will come from the automotive and industrial demand. 

There are signs that combustion engine vehicle demand is rising still continuing even as many people continue buying electric vehicles. On Tuesday, Ford said that it would delay its $3.5 billion battery investment as demand waned. 

Most importantly, the council believes that the world will it a record supply deficit in 2024. It sees the deficit widening to 353 koz in 2024, which could be a positive thing for its prices. The report added that:

“Platinum supply is expected to increase by 3% to 7,310 koz in 2024, although remaining constrained. Mining supply growth of 2% is forecast but remains challenged as electricity shortages remain a risk. Furthermore, miners are publicly discussing the need to restructure.”

Platinum prices forecast

Platinum chart by TradingView

On the daily chart shows that platinum prices have bounced back in the past few days. The price has jumped from a low of $839.34 to a high of $940. It is now hovering near the highest point since September 19th. It has risen above the 50-day and 100-day Exponential Moving Averages (EMA).

The price has moved above the higher side of the descending channel, which is shown in black. Therefore, the outlook for platinum is extremely bullish as the supply deficit continues rising. If this happens, the next point to watch will be at $988.72, the highest point on July 18th.