Platinum and palladium price changes: From demand fluctuations to financial games.

In 2025, the staged and significant increase in the price of white precious metals has attracted market attention. Platinum and palladium, as important materials for automotive catalytic converters, not only reflect changes in their respective supply and demand structures, but are also influenced by multiple factors such as macroeconomic cycles, financial speculation, and policy expectations. The prices of platinum and palladium have shown large fluctuations and strong staged trends over the past thirty years, with highly structural and speculative characteristics. Since 1990, the trend of platinum prices has shown clear structural upswings and downturns, especially after 2000. The price trend experienced an upward cycle driven by structural supply-demand imbalances, followed by a downward cycle driven by changes in demand structure and de-stocking measures. The significant increase in the penetration rate of diesel vehicles from 2000 to 2008, structural rigidity on the supply side, implicit inventories, and investment funds all played important roles in driving the sharp rise in platinum prices. In 2025, platinum prices rebounded significantly, with a deepening shortage on the supply side, investors' reevaluation of the "structurally undervalued" nature, leading to marginal capital inflows and short-term short-covering driving the price rebound. Looking ahead, whether platinum prices can enter a new bull market depends on the sustainability of supply disturbances, the actual implementation of palladium substitution logic, and whether there will be further structural demand improvements. Palladium is a niche and easily manipulated precious metal market, with price fluctuations driven not only by supply and demand fundamentals, but also deeply influenced by geopolitical factors, financial capital, and oligopoly power. Global palladium supply is highly concentrated, mainly from Russia and South Africa, with Russia having a de facto triple control system comprised of the National Treasury, Norilsk Nickel, and oligarch capital. This determines that the pricing mechanism of palladium is far from being explained solely by market behavior. Palladium has experienced two rounds of "structurally scarce combined with financial speculation" driven super bull markets in the past twenty years. Looking ahead, palladium prices are expected to return to rationality, with clear trends towards new energy alternatives, but given the highly financialized and concentrated nature of the palladium market, potential irrational price disturbances need to be monitored closely. Platinum and palladium, as important materials for automotive catalytic converters, not only reflect changes in their respective supply and demand structures, but are also influenced by multiple factors such as macroeconomic cycles, financial speculation, and policy expectations. The prices of platinum and palladium have shown large fluctuations and strong staged trends over the past thirty years, with highly structural and speculative characteristics. 1. Platinum Price Structural Fluctuation Patterns Since 1990, the platinum price has ranged between $300 and $2300 per ounce. The price peak occurred in 2008 at $2273 per ounce, coinciding with the peak of the global commodity cycle; from 2004 onwards, the price was supported multiple times around $750 to $800 per ounce. The trend of platinum has shown clear structural upswings and downturns since 2000, particularly after 2000, when the price trend experienced an upward cycle driven by structural supply-demand imbalances, followed by a downward cycle driven by changes in demand structure and de-stocking measures. The entire operating process after 2000 can roughly be divided into four main structural stages. 1.1 Stage One: 2000-2008 Structural Bull Market From 2000 to 2008, platinum prices experienced a typical structural bull market, rising from around $450 per ounce to a high of $2273 per ounce in 2008, a four-fold increase. This uptrend was not a short-term trend but a trend formed under the influence of multiple fundamental variables. First, the significant increase in the penetration rate of diesel vehicles constituted the core support for platinum demand. In the early 21st century, the production of diesel cars continued to increase, and with the tightening of global emission regulations for diesel cars, many vehicles were equipped with platinum-based oxidation catalysts and platinum-coated particle filters to comply with emission regulations, especially in Europe, where the "Euro IV regulations" were implemented in 2006. Data shows that the share of diesel cars in new cars in the EU increased from 32.8% in 2000 to 53.6% in 2007, driving an increase in platinum consumption. In addition, new regulations for medium diesel vehicles in the United States, as well as the rapid growth of passenger car production in Asia, also drove up global demand for platinum for automotive use. Secondly, the structural rigidity on the supply side intensified the supply-demand mismatch in the market. Platinum production has long been highly dependent on South Africa; although South African platinum production increased from 114 tons to 170 tons between 2000 and 2006, an increase of approximately 49%, it did not keep up with the rate of demand growth during the same period, showing that the supply side was severely lagging in its response to price signals, demonstrating a typical "limited supply elasticity" characteristic. From 2007 to 2008, due to the national power shortage in South Africa (Eskom power cuts), coupled with a series of unexpected smelter shutdowns, safety issues, and tense labor relations, platinum mines experienced large-scale production cuts, with production dropping from the peak of 170 tons in 2006 to 146 tons in 2008, becoming a key supply bottleneck in this bull market, further fueling concerns in the market about physical scarcity, accelerating price increases. Finally, implicit inventories and investment funds acted as important catalysts driving price increases. In a period before ETFs and other financial instruments were widespread, some institutional investors built off-market positions through physical hoarding, boosting marginal buying demand in the market. At the same time, the commodities market was in a bull market cycle, with gold, crude oil, and base metals prices generally trending higher, causing platinum as an asset with both "industrial and precious metal" attributes to receive valuation premiums simultaneously. During this period, the rise in platinum prices was not only driven by demand but also reflected a structural characteristic of supply bottlenecks and resonance amplification of financial behavior. This culminated in the peak of this structural bull market on the eve of the global financial crisis in 2008. 1.2 Stage Two: 2008-2016 Structural Decline and Correction After the global financial crisis in 2008, platinum prices quickly fell from their peak, dropping from $2273 per ounce in March to $756 per ounce in November, with a maximum single-year decline of over 65%. Although the price briefly rebounded to over $1700 per ounce in 2010-2011, the overall trend did not recover to pre-crisis levels, with prices falling to around $800 per ounce in early 2016, presenting a typical pattern of "structural downturn." The price evolution during this period was not solely due to one event, but rather a comprehensive manifestation of deep adjustments on both the supply and demand sides and changes in financial market preferences. First, the severe impact of the financial crisis on consumer demand led to a contraction in platinum's end consumption scenarios. From 2008 to 2013, global car sales saw a sharp decline, with passenger car registrations in Europe dropping from 15.6 million vehicles in 2007 to 11.83 million vehicles in 2013, particularly affecting diesel models. The global jewelry market also experienced a downturn during the crisis, with high-end platinum consumer markets in North America and Japan being squeezed by declining disposable incomes and shrinking assets. Industrial applications of platinum, such as in glass and chemicals, were also affected by capacity reductions, resulting in overall suppression of demand. Secondly, the structural decline in the market share of diesel vehicles undermined the foundation of platinum's largest single demand scenario. After 2008, while diesel cars still maintained a certain market share in Europe, their position in the global automotive industry began to weaken. Improvements in gasoline vehicle efficiency, the rapid rise of new energy vehicles, and increased regulatory tightening following the 2015 Volkswagen emissions scandal limited the prospects for diesel technology. Data shows that the share of diesel cars in the EU28 countries declined rapidly from 2015, reaching around 29% in 2020. This trend significantly suppressed medium to long-term demand expectations for platinum in the automotive sector. Finally, the gradual clearing of high financial positions accumulated earlier resulted in implicit supply pressure. From 2007 to 2011, driven by hedge sentiments and expectations of commodity inflation, some hedge funds and institutions increased their positions in platinum through physical hoarding, but with the falling prices and declining investor confidence, some of these positions were gradually closed out or redeemed, adding to the actual supply flowing into the market, weakening price support. Platinum ETFs developed gradually after 2008, but their overall fund size remained limited compared to gold, silver, and other assets, failing to provide stable support. In summary, from 2008 to 2016, platinum prices experienced a "slow bear" stage, characterized by a weakening of fundamentals, release of financial positions, and declining market attention. The price decline was not a short-term adjustment, but rather a systemic reversal of the previous bull market logic. 1.3 Stage Three: 2016-2024 Low-level Consolidation and Rebalancing In early 2016, platinum prices fell to around $800 per ounce. After a significant sell-off during the COVID-19 pandemic and subsequent sharp rebound, platinum prices have remained within a range of $800 to $1100 per ounce, forming a clear consolidation platform. The contraction of traditional automotive demand was a key factor leading to the low performance of platinum from 2016 to 2020. With the continuous decline in the market share of diesel cars in Europe and disruptions in production due to semiconductor shortages and supply chain bottlenecks, annual platinum demand for automotive catalysis decreased from 104 tons to 75.9 tons. Western Europe as a major consumer market also experienced a noticeable decline in demand. After the outbreak of the pandemic in early 2020, global car manufacturers suspended production on a large scale, combined with overall financial market panic, platinum, as a weak safe-haven precious metal, experienced concentrated selling pressure, with prices briefly falling below $600 per ounce, reaching a new low in over a decade. At the same time, the rapid penetration of new energy vehicles theoretically squeezed the traditional demand space for platinum. After 2020, global electric vehicle sales saw explosive growth, particularly in China and the EU regions, with the market share of new energy vehicles jumping from single digits to over 30%, replacing traditional internal combustion engine vehicles. However, from 2020 to 2024, as environmental standards tightened and concerns about interruptions in palladium supply heightened, automobile companies adjusted their catalytic converter formulations, gradually transitioning to "platinum for palladium", resulting in a rebound in global platinum catalytic demand, reaching 108.6 tons in 2023, leading to a noticeable uptick in platinum prices. However, the progress of platinum substitution by palladium is limited by platform adaptability, catalytic performance, and emission regulations, making it challenging to achieve significant incremental demand and unable to support continued price increases. In conclusion, from 2016 to 2024, platinum experienced a period of valuation adjustments, demand transformations, and structural adjustments at a low level. While prices did not continue to decline, there was a lack of clear upward momentum, with the market in a slow transition phase towards technical replacements and industrial restructuring. 1.4 Stage Four: Price Rebound Since 2025 In 2025, platinum prices rebounded significantly, quickly rising from a low of $878 per ounce in April to $1500 per ounce in mid-July. This recent uptrend has not yet formed a clear trend reversal, but has shown signs of some structural improvements, with market expectations warming for a medium-term supply-demand rebalancing. Firstly, the deepening shortage on the supply side has continued to intensify, providing direct impetus for price rebound. The power crisis in South Africa worsened in early 2025, coupled with some older mines entering maintenance early, resulting in a year-over-year decline in South African platinum production in the second quarter, raising concerns in the market about a fall in annual supply. Secondly, investors' reevaluation of the "structurally undervalued" nature has led to marginal capital inflows. With platinum prices long below gold, the market undervaluing its potential supply-demand tight balance risks, especially given the background of structural surplus in palladium and the acceleration of substitution logic, platinum has medium-term room for recovery. Platinum ETF positions stopped falling and began to rise from May, showing marginal improvement in market sentiment. However, ETF inventories of platinum began to decline rapidly from mid-June. Finally, technical buying and short-covering have also driven the price rebound. Since 2023, platinum prices have been in a long consolidation period, with a high concentration of short positions in the market. With supply news driving prices breaking through the $1100 per ounce level, some stop-losses and long positions increased, intensifying the short-term upward slope. Looking ahead, whether platinum prices can enter a new bull market still depends on the sustainability of supply disturbances, the actual implementation of the palladium substitution logic, and whether there will be further structural demand improvements. If the power crisis is alleviated and demand is not effectively restored, this current uptrend may reach a temporary conclusion in the future. Currently, it appears that South Africa's production capacity constraints and the trend of reduced production in older mines may continue, supporting a medium-term tight supply of platinum; the palladium substitution effect is ongoing, combined with the potential release of new demand for emerging hydrogen energy sources, likely bringing new consumption increments for platinum. Additionally, special attention should be paid to the potential for further buying of platinum by fear-of missing out funds due to future upward trends in gold prices. 2. Palladium Price Structural Trend Analysis Palladium has experienced two rounds of bull markets in the past thirty years, characterized by sharp fluctuations in an upward trend, with a historical high price of $3015 per ounce occurring in early 2022, driven by geopolitical risks, and influenced by speculative funds. The lowest price was $78.25 per ounce in the early 1990s when the Soviet Union released a large amount of stockpile and market demand was insufficient, causing prices to plummet to extremely low levels. Most of the uptrends in palladium were not slow accumulations, but rather explosive breaks driven by a combination of supply-demand dynamics and market-dominant behavior (such as speculation, short squeeze, and policy disruptions). Overall, the trend of palladium prices can be divided into four major structural stages since the early 1990s. 2.1 Stage One: 1997-2001 Squeeze-style Rally During the late 1990s, after the dissolution of the Soviet Union, a significant surplus of palladium was released into the market, leading to a drop in the price of the metal. This caught the attention of Western investors, leading to a speculative rally in the palladium market known as the "squeeze-style rally". The market's focus on falling palladium prices and growing demand for palladium in catalytic converters for vehicles led to an intense buying frenzy, especially driven by hedge funds. This period saw a surge in prices, from around $200 per ounce in 1997 to nearly $1100 per ounce in 2000. The rally was fueled by fears of a supply shortage and increased demand, particularly in the automotive sector. The rally was accompanied by the rise of investment entities focusing on palladium, including ETFs, to which investors flocked, further fueling price increases. Russian palladium supplies being scarce due to geopolitical turmoil and other reasons added to the speculative frenzy, resulting in a sharp spike in palladium prices. The pricing mechanism during this period was influenced by a mix of fundamentals and market sentiment, characterized by a squeeze-induced rally and a surge in speculative trading, leading to a rapid upward trajectory. 2.2 Stage Two: 2001-2015 Structural Decline and Correction Since 2001, palladium prices gradually declined from the peak of the previous rally and remained in a range-bound pattern for over a decade. This stage saw a return to focus on supply-demand fundamentals in the palladium market. The relinquishing of palladium price control by Russia and the gradual readjustment of global supply dynamics marked a new order in the palladium market. Responding to pressures from China's entry into the WTO, the United States and other WTO member states demanded that Russia comply with WTO rules regarding palladium export quotas, ultimately aiming to have Russia abolish the quota system and relinquish its palladium pricing sovereignty to South Africa. From 2001, Russia began to gradually eliminate export quotas, transitioning the global pricing power of palladium to South Africa and leading to a gradual decline in price from 2002 onwards, maintaining a period of consolidation. The high platinum prices led to demand profile adjustments, with automotive manufacturers becoming more cautious about costs and some switching to platinum-based catalytic technologies. Environmental regulations and improvements in manufacturing processes led to a softening of demand for palladium in the automotive sector, as carmakers sought cost-effective solutions. The supply chain structure was optimized globally, with an increasing proportion of palladium production in South Africa's platinum group metal ecosystem, easing concerns about supply constraints. Palladium prices experienced two downward corrections in 2003 and 2008, returning to low levels. It is important to note that following the 2014 Ukraine crisis, western sanctions on Russia and a downfall in oil prices triggered a financial crisis in Russia, leading to a new phase of financialization of palladium markets. Potanin and others established a structure through the Global Palladium Fund aimed to control palladium trading, setting the stage for abnormal price increases. 2.3 Stage Three: 2016-2020 Financial-led Super Bull Market Starting in 2016, palladium entered a new phase of exceptionally strong bull markets, with prices starting around $450 per ounce and continuously breaking through the $1000 and $2000 per ounce levels, reaching a peak of $2900 in early 2020. This phase was driven by a logic of "financial forcing" under the dominance of Russian players. Following the Ukraine crisis in 2014, Russia faced severe western sanctions and a collapse in oil prices, leading to a drastic decline in export revenues, persistent fiscal deficits, and fiscal crisis. Potanin, a Russian oligarch, and others established the "Global Palladium Fund" (GPF) in 2016. In the 2016-2017 period, to make up for the fiscal deficit, Russia's state treasury, Gokhran, began selling off strategic palladium stockpiles accumulated in the previous years. These palladium stocks did not enter the market but were continuously purchased and held by oligarchs through financial means, circumventing sanctions for fiscal realization. GPF established an operational chain centered around ETFs. Investors bought into ETF products, which passively bought palladium physically, causing a rapid tightening of liquidity in the spot market; companies, reluctant to hold spot palladium, turned to leasing palladium through ETFs and paid interest. This strategy allowed investors to benefit from both price increases and leasing revenues, attracting more funds into the market, reinforcing market expectations for palladium scarcity, and driving prices continuously higher. At the same time, Norilsk Nickel, under Potanin's control, proactively reduced its production to enhance the atmosphere of spot market tightness. The South African mining region also faced production instabilities due to power constraints and safety incidents. With the upstream industry gaining de facto control over the supply end and the downstream automotive sector facing environmental regulations and increasing usage per unit, pall