The mood was buoyant as Platinum Week kicked off in London on May 18. It was at this annual industry get-together last year that platinum began its remarkable recovery, following a long slump.
Ed Sterck, head of research for the World Platinum Investment Council (WPIC), an industry-funded organisation, recalled the 2025 event. He told the FM that platinum had begun to stir on “the Tuesday” amid news that there was significant buying by wholesale jewellers in China.
“That was the visible factor,” says Sterck. “The less visible factor was actually that above-ground stocks had been depleted to unsustainably low levels.”
Promisingly for platinum group metals (PGM) miners, not much has changed in a year: the WPIC has forecast another platinum deficit for 2026. This is despite an expected 50% redemption in investor positions through exchange and ETFs, and as buyers leave the expensive jewellery market. The WPIC’s deficit forecast year on year is a reduced one, but a deficit nonetheless.
What’s more, the price of platinum may have weakened slightly lately but it is still a full 100% better than in May last year. The long-term fundamental picture remains extremely strong, offsetting the negatives from the Middle East conflict, says Sterck.
“I would hesitate to suggest prices will double again,” he says. “But if prices have already doubled from last year and yet we still have deficits — commodity market economics 101: how do you solve a deficit? One way is higher prices to incentivise new supply. That’s not really working. Higher prices should also incentivise lower demand, and that’s not really working either. So, the market tension is still very much extant.”
It’s worth remembering that the price of platinum is not the whole story. The so-called minor platinum group metals that are mined with platinum, such as ruthenium and rhodium, give comfort because of the different but complementary market forces that influence them.
Data centre construction will be positive for platinum and ruthenium
— Rupen Raithatha
“Data centre construction will be positive for platinum and ruthenium, which are critical for the magnetic layers used to store data on hard disks,” says Rupen Raithatha, market research director at Johnson Matthey, a semi-fabricator and industry consultancy. “This year should also see the first commercial-scale use of iridium in proton exchange membrane (PEM) electrolysis for green hydrogen,” he says.
This is positive news for investors in South African platinum shares, even for those not customarily disposed to it. Unlike gold in South Africa, PGM production has a long-term investment “story”.
But short-term risks are never far away. The oil price shock is central among inflation risks posed by the Middle East crisis. Adrian Hammond, an analyst at Standard Bank Group Securities, estimates 2%-4% additional inflation as a result of the war and the political standoff that is under way. Valterra Platinum is an outlier in this regard: it may post up to 7%-10% in increased input costs.
Investors have also adjusted their outlook as a result of the conflict. “If you’re operating a multi-asset portfolio and you need more collateral for your energy positions after precious metals prices have risen, those holdings are an easy source of liquidity to back your energy positions,” says Sterck. There’s also been more support for the dollar ahead of possible interest rate reductions, a negative for commodities.
Another consequence of energy inflation is a pulse in battery electric vehicle (BEV) market absorption. The pure BEV drivetrain uses no PGMs, and hybrids less than the internal combustion engine. First-quarter BEV sales are flat year on year, according to RMB Morgan Stanley, but in March alone BEV sales in Europe increased 41% year on year with pure BEV penetration approaching 25%. This is a notable comeback from last year when the cancellation of US government tax credits for BEVs, and a parallel end in subsidies in China, weighed on the sector.
Exogenous events aside, the key fact for JSE investors is that South African platinum shares remain powerfully cash flow positive. Spot free cash flow yields at Sibanye-Stillwater and Northam Platinum were 11.6% and 10.5% respectively at the time of Hammond’s report on May 11, when the spot PGM basket price was R43,000/oz — relatively robust in the context of Middle East tensions vs R52,000/oz pre-war.
Northam remains Hammond’s preferred pick. Sibanye-Stillwater and Impala Platinum are more leveraged due to their overall higher cost. Valterra is long-life with major production growth in its reach, though CEOs in the sector are at pains to keep growth capex under wraps, at least for now.
Sterck remains confident of a strong recovery in PGM support in the remainder of the year. “As things settle down in the Middle East, people will be looking again not just at interest rates but at what the impact of those interest rates is on the US balance sheet, and looking for alternatives to holding dollars and treasuries,” he says.
Platinum Week London is just one instalment. Another event is planned for Shanghai in July, by which time there may be a resolution to the Middle East war. This could send investors back to metals from energy.
One sidelight worth watching is the Guangzhou Futures Exchange, a commodities derivative exchange launched in November. Contracts totalling 500,000 ounces were amassed in its first month, and while they can be rolled forward, some metal will be delivered. In this fevered atmosphere, PGMs roll on.
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