Platinum and Palladium Are on the Move

September 22, 2025 | (13 mins 47 secs)

Jimmy Connor of Bloor Street Capital interviews Senior Portfolio Manager Shree Kargutkar on his outlook for platinum and palladium. EV sales growth has slowed globally due to cost, infrastructure and subsidy challenges. Hybrids and internal combustion engines (ICEs) remain dominant, sustaining platinum and palladium demand for emissions control.

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Video Transcript

James Connor: Shree, thank you very much for joining us today. Given the moves we've seen in these metals this year and in the last few months, many people have been asking me about platinum and palladium. I have to admit, I don't follow these metals that well and don't know much about them. I'm hoping you can help me with that.

You're a Senior Portfolio Manager at Sprott Asset Management and invest in the sector, so you're the right person to speak to. I want to jump right into it. One of the things I often hear about platinum and palladium is that they fall under the category of PGMs. What exactly are PGMs?

Shree Kargutkar: PGMs are the platinum group metals. It's a certain group of metals that tend to coexist in the Earth's crust and are often mined together. We're talking about platinum and palladium. Sometimes people throw in rhodium or ruthenium. These are the different elements that make up the PGM complex.

James Connor: Let's attack each one of these metals by themselves. I want to start with platinum. It's trading around $1,700 an ounce, give or take. It's up 80% this year. What's been driving this demand in platinum?

Figure 1. Platinum and Palladium Began to Breakout in April of this Year

Source: Bloomberg. Period from 10/01/2024-9/30/2025. Platinum is measured by the XPT Curncy; Palladium is measured by the XPD Curncy. Past performance is no guarantee of future results.

Shree Kargutkar: The demand for platinum has been robust for many years. If you're asking what is driving the price movement in platinum, the big driver behind it is the recognition by the broader market that the demand for platinum is far outstripping the supply, and the supply of platinum is highly inelastic, whereas the demand remains unrelenting. There are certainly very few ways of substituting away from platinum that we know of right now.

James Connor: Why don't we talk about the demand for platinum? What's driving the demand? What's it used for?

Shree Kargutkar: If you look at platinum, there are several different sources of demand. The biggest source of demand is the autocatalysts. Most people who drive cars, especially those that are either hybrid or have an internal combustion engine (ICE), require the installation of a catalytic converter so that the emissions can stay as clean as mandated by the government. That is the biggest source of demand for both platinum and palladium.

The second big source of demand is industrial uses, which gets into much of the nitty-gritty. But everything from glassmaking to chemical manufacturing to petrochemical refining requires the use of platinum. Palladium also has a small industrial demand, and similar to platinum, it's used to catalyze or be in place for high-end electronic applications, capacitors, IoT (Internet of Things), etc.

James Connor: When you say the number one use of platinum is for catalytic converters, what percent would it be?

Shree Kargutkar: About 40% of the total demand. I will always be off by a few percentages, depending on which year you're talking about. However, about 40% of the demand for platinum in any given year will be from the automotive sector. About 40% is from the industrial sector. Then we have things like jewelry and investment demand for ETFs, bars, etc.

Figure 2. 

†PGM Market Report June 2025. May not add up to 100% due to rounding.

James Connor: Why don't we talk about the demand and supply? You just spoke about demand. But what about supply? What's going on there? Do we have any mines coming online?

Shree Kargutkar: The short answer is yes and no. We have some mines that are expected to come online. Ivanhoe is looking to start up its Ivanplats operation. But on the flip side, some of these old mines in South Africa are slowly winding down their output or may even be shut down.

When you look at the top line, the total number of ounces coming out of the ground is 5.5 million ounces as far as we can see. And then you add on a little bit of recycling. These metals can be reclaimed when cars are salvaged. Typically, about 1.5 million ounces in any given year. You're talking about a total supply of 7 million ounces for platinum.

James Connor: And demand is?

Shree Kargutkar: Demand is 8 million ounces, give or take. There's always a bit of a fudge factor. No one really knows. But in any given year, the demand for platinum has been in the range of 7.8 to 8.2 million ounces. If you look at the supply of 7 million ounces, naturally, that leads to about 1 million ounces of a deficit. And that has been the case for the past few years, where platinum has been in a deficit.

In the coming years, the expectation is for the demand to go up. We can get into some reasons why, but the expectations are for demand to increase ever so slightly. And against that, the supply is not responding.

James Connor: Let's get into some of the reasons why. I want to ask you first about EVs (electric vehicles). Five years ago, like everybody wanted an EV. And then it topped out two or three years ago in North America. The number of units being produced and the number of units being sold have come down quite a bit. Is this price move that we've seen in both platinum and palladium? Does it have to do with more people buying traditional cars or internal combustion engines?

Shree Kargutkar: It's part of the picture because, like you said, a few years ago, the expectation was for EVs to ramp up and take a bigger and bigger market share from gas-powered engines. And the reality has been somewhat less than expectations.

In North America, for instance, the uptake of EVs has really slowed down. In China, however, the uptake of EVs has been quite strong, perhaps because of a huge push from the governmental side of things.

Against that, Europe is also asking for tighter emissions from gasoline—or diesel-powered cars. China is similarly asking for a stronger standard and lower emissions. So now there is a set of standards in China that will be coming out in 2026. All of this necessitates that both regular gas-powered and diesel-powered cars have a slightly higher loading of platinum and palladium, as well as in hybrid cars.

Five or six years ago, hybrids were not really talked about. More big automakers, especially like Honda, were about to pivot full-on into EVs, and now they are taking a step back. They're recognizing that hybrids, perhaps, are the better way forward because they are more efficient. However, like regular gas-powered cars, hybrids still require a catalytic converter and platinum or palladium.

Overall, I would say the net effect has been a bit of a surprise in terms of where people thought the demand for platinum and palladium would be five years ago, today, and where it is materializing right now.

James Connor: I recently took a Honda Hybrid out for a test drive and was surprised by how nice it was. I would buy one of those, but I would not buy an EV yet for numerous reasons.

The big one is that we both live in very cold environments, and they just don't hold their charge as well in the winter. The other thing has to do with the infrastructure, so I'm not buying an EV anytime soon. Maybe that'll improve over the next five years, but we'll see what happens.

Why don't we move on now and talk about palladium? It is also up over 60% on the year, with a big part of that move just coming in the last few months, when it traded around $1,500 an ounce. What's happening here?

Shree Kargutkar: Like you pointed out, palladium is up 50%. And palladium had really sold off on the expectation that its main source of demand would slowly trend lower. And palladium is a bit of a one-trick pony. 85% of its demand comes from the auto sector, and if people were thinking that over time, there would be a big shift away from gasoline-powered cars. Naturally, palladium would be one of the biggest hits as a result.

But as we discussed earlier with platinum, the expectation from five years ago has not really materialized today. As a result, the demand for palladium has remained slightly more robust than many had given it credit for.

If you recall, if you go back to 2016, before that, for three or four years, the price of palladium was stuck in that $6,800 per ounce range while it was in a deficit.

Once that deficit became a worry and investors started picking up on it, the price went from $600 to north of $3,000. And we are still in a somewhat deficit situation as far as palladium is concerned. It is not as deep a deficit, but it is in a deficit, and that deficit is not expected to be in a surplus territory, at least for the next couple of years.

That recognition of palladium is perhaps, or recognition of palladium being as tight as it is right now, is part of what's driving the price action in palladium over 50%, like you said.

James Connor: You mentioned that a large percentage of platinum comes from South Africa. What about palladium? Where does it come from?

Shree Kargutkar: 40% of the global palladium supply comes from South Africa. And I think it's closer to 75% of all the platinum supply comes from South Africa today.

James Connor: As mentioned, platinum and palladium have made significant moves this year. Where do you see the price going in the coming years?

Shree Kargutkar: Deficits lead to the recognition of a mismatch between the supply and demand. We are in a deficit situation for both platinum and palladium. The deficits for platinum are perhaps a bit more intense. We're at a critical level right now in that the above-ground stockpiles we have observed worldwide are just not enough to meet the set deficits for more than 3 or 4 years.

And after that, what happens? I mean, you can be in a scenario where you suddenly can't manufacture enough cars because you don't have enough platinum or palladium to go around.

I suspect that platinum's price is due for a significant re-rate. It is a very small, esoteric market—only 7 million ounces per year, as I said —so it takes a long time for investors to recognize this. But when they do, the price response tends to be quite spectacular.

So far, we're perhaps witnessing the first leg up on that price response side of things, with platinum having moved from under $900 to $1,600-$1,700 right now.

James Connor: You mentioned we've been running a 1 million ounce deficit. How long have we had that deficit, and have we seen that in the past? Is that a big number? Can it get a lot larger?

Shree Kargutkar: The deficit in platinum was not a deficit forever. If you go back, I think in 2021 or 2022, the deficits might even have been a small surplus at that time. But those deficits have been growing recently. Earlier, we touched on palladium and how the price went from $600 to over $3,000.

Naturally, platinum and palladium can be substituted to some degree. We have seen some automakers shift away from palladium, which is too expensive, towards platinum, which is more readily available and is not in a deficit situation.

Now, we're left with a market for both metals in deficit. As you said, the platinum deficit is there, and it has been growing over the past few years as automakers have substituted away from palladium. It's not expected to change for the next few years, however many, because there's not a lot of extra supply of the metal coming out of the ground.

To answer your question, not always in a deficit, but the deficit is expected to persist for at least the end of the decade.

James Connor: Shree, I think it's worth noting that when it comes to mining platinum or palladium, we don't have any pure platinum or pure palladium mines. Maybe you can just speak to that.

Shree Kargutkar: You're right that we don't have pure palladium or platinum mines that we know of. Oftentimes, we get PGM mines. At the outset of this conversation, we're touching on what PGM is. It's a basket of different metals: platinum, palladium, and a few other metals. Typically, these metals co-occur with platinum, the dominant element in a South African mine.

In the rest of the world, we often see PGMs co-occur with nickel deposits, sometimes with a little bit of copper or what have you. However, they tend to be a credit as opposed to a primary metal produced by these mines.

There are always the one-off situations here and there. We have a palladium-dominant mine in Montana, for instance. But by and large, outside of Africa, we're talking about platinum and palladium being mined as a credit to other metals. Within Africa, we get platinum and palladium mined together. But there are no platinum mines and no palladium mines.

James Connor: This has been a good overview of palladium and platinum. And I want to thank you very much for spending time with us today. If somebody wants to learn more about these metals, where can they go?

Shree Kargutkar: They can go to Sprott.com. We try to provide as many insights as we can. We try to be timely about it, especially when we see a big shift happening on either the supply-demand side of things or in response to a big price action. We try to produce some content around that.

Other sources are also available. There's the World Platinum Investment Council (WPIC), for instance. They provide really good numbers. Johnson Matthey Platinum is also a really good source of information.

James Connor: Shree, if an investor wants to invest in platinum or palladium, does Sprott offer any products that focus on these metals?

Shree Kargutkar: We certainly do. We offer investor SPPP, the Sprott Physical Platinum and Palladium Trust (NYSE Arca: SPPP). It contains platinum and physical platinum, exposing investors to both key PGM elements in a single wrapper.

James Connor: And what markets does that product trade on?

Shree Kargutkar: It trades on the U.S. exchanges.

James Connor: Shree, this has been a great discussion, and I want to thank you very much for spending time with us today.

Shree Kargutkar: Thank you so much, Jimmy. Pleasure to be on.