Refining services provider Heraeus Precious Metals finds in its latest appraisal publication that China’s platinum jewellery and investment demand is still at the forefront of market fundamentals.

Following the London Platinum Week event having been hosted on May 20 and 21, Heraeus notes that among the more prominent themes at the event was the evolution of China’s demand as a leading consumer of platinum.

China remains the largest platinum market globally and dictates the global demand trajectory every year. The country accounts for more than a quarter of global platinum jewellery demand, with demand indicators remaining relatively healthy in China this year.

For example, Chinese platinum jewellery fabrication grew by 50% in the first quarter of this year alone, which could be owing to wholesalers looking more favourably on platinum as high gold prices pose a threat to gold jewellery demand.

Heraeus says a number of fabricators in China are reportedly increasing stock in showrooms throughout the country, but sales are also seemingly shifting from yellow and white gold to platinum at the consumer level.

China’s platinum imports were 371 000 oz in April, which is on par for averages within the last five years but about 40% below that of April 2024. A meaningful increase in wholesale demand is, therefore, yet to translate into trade data.

Heraeus explains that, although platinum investment has potential to increase in China, taxes are somewhat prohibitive. Chinese investors have no access to onshore platinum exchange-traded funds and, therefore, investment is primarily carried out in the form of bars and coins.

Jewellery itself can also be used as an investment vehicle and store of value.

However, a point of discussion at the London Platinum Week event was China’s complex value-added tax system for platinum, which often discourages potential investors as it eats away at value appreciation.

According to the World Platinum Investment Council, platinum investment will reach a record of 186 000 oz in China this year for bars and coins. In turn, an increase in bar and coin fabrication can redirect supply away from sponge production for industrial and autocatalyst end-uses.

Heraeus says if fundamentals are now viewed as strong enough, platinum could extend its rally.

Now in its third straight year of deficits, which have been drawing down above-ground stocks of platinum, the platinum price rose markedly last week by 9% to $1 108/oz. This marked the largest one-week performance for platinum since the second week of February 2021 during which it rose by 11%.

Fundamentally in a deficit for this year, net demand is forecast to remain stable year-on-year, with an underperformance in the supply side being the key driver.

“If traders and market participants view the market now as tighter, with stocks meaningfully drawn down, the price could find further support,” Heraeus states.

Moreover, China is poised to have half of its heavy trucks on the road be electric by 2028, which could have a significant impact on heavy-duty autocatalyst demand if realised.

However, in the year-to-date, only 11% of medium- and heavy-duty trucks produced in China were battery electric vehicles, indicating that a 40% increase in electric truck market share in just three years is very optimistic.

Meanwhile, Heraeus says gold prices continue to trend high at about $3 367/oz, having increased by $146/oz in one week. This is owing to growing concerns over US government debt repayments, as well as the prospect of tricky tariff negotiations ahead this year, which have affected the dollar’s strength in the last two weeks.

When coupled with a more conservative economic outlook in the US and a renewed prospect of 50% tariffs on EU exports to the US, higher gold prices will continue to be supported.

In terms of other platinum group metals (PGMs), Heraeus says palladium should benefit from growing Japanese automotive demand this year. New passenger car registrations have experienced double-digit year-on-year growth every month so far this year in Japan.

Cumulatively, sales have grown by 164 000 units in the year-to-date and the outlook for the rest of the year remains positive for domestic car manufacturers.

Japanese automotive PGM demand is estimated to grow to one-million ounces of platinum, palladium and rhodium this year.

Heraeus expects the palladium market to be in a moderate surplus this year, while platinum and rhodium will be in a deficit.

Palladium prices rose to more than $1 000/oz last week.

Lastly, silver prices rose modestly last week to a closing price of $33.38/oz. Heraeus says India’s sluggish silver imports, which is usually the biggest global source of demand, decreased by 63% year-on-year in the year-to-date.

With silver prices having risen in February, Indian wholesalers and consumers may have been less keen to make purchases. Additionally, a decrease to silver bullion import duties in mid-2024 resulted in a surge in silverware fabrication, through this effect has largely dissipated.

Heraeus expects silver jewellery and silverware demand to be subdued in the remainder of the year if the price continues to perform well.