Title: Edward Sterck: Platinum Forecast Shifts to Surplus — What Changed? Show: Investing News Network (INN / investingnews.com), host Charlotte McLeod Guest: Edward Sterck (Director of Research, World Platinum Investment Council — WPIC) Date: 2026-09-16 URL: https://youtu.be/5-8bDBV4bFU Length: 16:49 Note: YouTube auto-transcript; fillers (um/uh/you know) and stutters removed, obvious ASR name fixes (Sturk→Sterck, Mloud→McLeod, Walsh→Warsh, WPC→WPIC, backidation→backwardation, "back to the four"→"back to the fore", thermouples→thermocouples); wording otherwise verbatim.
00:04 I'm Charlotte McLeod with investingnews.com and here today with me is Edward Sterck, director of research at the World Platinum Investment Council. Thank you so much for being here. Great to have you as always. >> Well, thank you for having me on again, Charlotte. It's always a pleasure to chat. >> Well, good to be with you and as usual, we're here to talk about the WPIC's latest quarterly report.
00:25 This time around, there are some key changes from when we talked back in May. Notably, we're now looking at a surplus for platinum in 2026 as opposed to a deficit. So, I wonder if you can talk about what changed there and how large that surplus is expected to be. >> Yeah, thank you. So, we're now forecasting a surplus of 265,000 ounces for 2026.
00:50 And that compares to our May forecast for a deficit of 295,000 ounces for the year. So, clearly that's quite a big swing. The main factor behind that change was almost entirely linked to investment flows. So in the first half of the year thanks to the conflict in the Middle East, we saw that translate into higher oil prices which in turn influenced expectations around US Federal Reserve rates.
01:18 And effectively before the conflict started the market was pricing in two rate cuts of 25 basis points each. As a result of the conflict, there was a point in time when somewhere between two and three rate increases were being forecast. So effectively higher rates to combat exogenous inflation. And stronger US rates equals a stronger US dollar and that's therefore negative for US dollar commodity prices including for the precious metal complex as a whole.
01:46 So that drove some pretty significant selling from ETFs. We also saw a bit of an easing of the trade tensions in the US that allowed some metal to flow out of CME bonded warehouses there. So in total in the first half of the year we had 600,000 ounces come out of those ETFs and exchange stocks and that drove the first half into a surplus of 550,000 ounces and that feeds into our full-year forecast.
02:10 I think the key thing to emphasize here is that this is all backwards looking. So that surplus in the first half of the year of 550,000 ounces and our full-year forecast for a surplus of 265,000 ounces which is lower suggests that in the second half of the year we're back into deficit.
02:31 So effectively in the second half of the year we see a deficit of 285,000 ounces. And so effectively the full year forecast for surplus is a little bit misleading because as I said it is kind of backward-looking. Well, great to get that context. I think we can definitely see that there's some nuance there and I think it comes through in the report as well.
02:50 One thing that stood out to me was that the market still remains tight due to its reliance on these above ground stocks. So, I wonder if you can talk a little bit about what's going on there. In particular, I noticed that the deficit for last year also got revised upward. So, that seems like something we should take a look at as well. Yeah.
03:08 So we saw some pretty significant upward revisions to glass demand. This is mostly linked to the production of PCBs. So the printed circuit boards that are going into data centers, AI linked fiberglass demand if you like. And so the revision to last year's numbers resulted in an increase to the deficit for last year.
03:29 So we're now over 1.4 million ounces. And as a result, if you think about the above ground stocks that you just mentioned, effectively that higher demand last year means that our above ground stock estimates, which is an estimate, needs to be treated with a little bit of care, was revised lower.
03:46 And so even though we had this surplus from the first half of the year, in effect, above ground stocks still remain at only just over 3 months of demand, which is at very depleted levels. The rule of thumb in commodity markets is anything less than 6 months of demand in terms of above ground stocks means that you're in a very constrained market.
04:03 So clearly, even with the first half surplus, the fact that we're back into a deficit in the second half, the market actually remains really quite precariously balanced at the moment. >> Well, and on that note, we've still got a few months left in the year. I wonder if there's a realistic chance that the platinum market shifts again and we go back to deficit expectations before the end of the year.
04:26 Is there a change that could catalyze that type of shift? >> I think there is. It's very much going to be linked to investment demand. Clearly we've got I guess some quite divergent opinions on what should be happening with rates in the US. You've got the FOMC meeting that is due on the 15th and 16th of September.
04:49 So we've got the results announcement expected on the 16th. In terms of the rate decision I think Fed chairman Warsh made some very hawkish comments at the Jackson Hole conference which is currently guiding the market towards a 25 basis point hike at the ongoing FOMC meeting.
05:13 However, at the same time, you've also got President Trump who's come out with some very strong opinions basically arguing that the Fed should in fact be cutting rates. I think some of his economic arguments behind that guidance kind of struggle to stand up to scrutiny to be honest with you.
05:32 But certainly I think the uncertainty around the ongoing independence of the Fed which is attacked quite a number of times and the potential for a US debasement trade similar to the one we saw in Q4 of last year. The potential for that to reemerge even if rates are hiked by 25 basis points I think is something that could ultimately be pretty positive for the precious metal complex as a whole.
05:55 And that includes platinum. So we could see a return to positive platinum investment flows in the second half of the year. In fact, we have actually seen some inflows into the ETFs already since the end of June. And that's something that could drive the market even further into deficit if it does materialize.
06:10 >> Yeah, I think we're talking at a pretty key time right now with that Fed decision coming right up. So we'll see how that plays out. I do wonder. So it seems like the surplus that we're seeing in the first half of the year seems quite dependent on investor demand and platinum of course it's got its investment side and it's got its industrial side.
06:30 Do you see that investment side continuing as the year goes on to have kind of that outsized impact on the market? >> I think for this year in particular it is kind of the determining factor. I think if you look beyond this year into 2027 and further into the future, there are industrial drivers that are probably going to be more critical.
06:50 So something that we identified towards the end of the second quarter of this year which we're meant to be the world experts on this but we weren't really fully aware of the extent to which platinum is being used in this way but the number of different AI linked applications for platinum including the production of advanced semiconductors, thermocouples, the crucibles that are used to produce the crystals that go into the optical interconnects, the PCB boards that I mentioned already, there's a lot
07:18 of AI linked potential growth to platinum demand going forwards. Clearly there's some discussions at the moment about whether we should slow down the development of AI, but I don't think that necessarily means that it's going to slow down the roll out of data centers and so on.
07:33 They're just trying to pause the development of the models at the kind of current status whilst they assess the safety of them. So that's something that could be a big factor. I'd say that green hydrogen is probably coming back into the agenda as well. That's been an area that's been quite quiet over the last few years.
07:48 It's taken longer to come through than I think people have been anticipating including ourselves. But one of the second order impacts from the conflict in the Middle East is potentially that green hydrogen may become a more important factor in different countries and different regions' strategies in terms of improving regional energy security.
08:08 So, in a way that conflict in the Middle East and the energy crisis that we're seeing right now could be for green hydrogen what the 1970s oil crisis was for European North Sea oil and gas production. >> Well, that would be very interesting to see play out. All right, so we've got some activity there on the industrial side.
08:27 I want to make sure that we talk about jewelry demand as well. It sounds like declines there are largely relating back to China. And one interesting point that stood out to me in the report was it mentions that China's slower economic performance has been a bigger drag on the sector than the Iran war, which is something that we talked about earlier this year.
08:46 So I wonder if you can unpack that for us. >> Yes, jewelry demand in the world ex-China has actually been doing pretty well, particularly in North America and Europe where we're seeing continued single-digit growth in jewelry demand and that's largely linked to the price of gold. So effectively consumers looking for alternatives.
09:04 White gold for example at the retail level has been selling at pretty much the same price as platinum which is kind of a slightly crazy scenario considering that white gold was developed to be the lower cost alternative to platinum. So those are two geographies where jewelry demand is really quite healthy.
09:20 We've got a slightly weaker market in Japan and India. But the area of significant weakness has really been China. And that stands in contrast to say the second quarter of last year where we saw the Chinese wholesaler and fabricator organizations really pushing platinum hard in order to try and get customers back that they were losing because of the high gold price.
09:44 The problem really last year was that they never actually kind of pushed that through in terms of trying to deliver the retail sales because the price of platinum more or less doubled. They took the lower risk route of just melting that platinum down and crystallizing the profits made on the price increase rather than trying to take the risk of selling it to consumers.
10:04 So that kind of proved to be somewhat damaging for the market there. And we're just seeing that weakness continue through to the present day. Could that change in the future? I mean, I hope it does, but at the moment, we don't see any kind of bright lights at the end of the tunnel for China jewelry demand for platinum.
10:20 >> I want to also now that we've touched on demand bring up the supply side. So, looks like mine supply is expected to stay pretty flat in 2026, but an 8% rise in recycling is expected. I think we've also spoken about this throughout the year where if prices are higher, we expect more recycling.
10:38 So with prices pulling back, is that something seen declining toward the end of the year? >> No, I think well I guess kind of addressing mining first of all, I think the current prices are very supportive of the mining companies, it's extremely positive for the economics for the companies.
11:00 I think if we were talking maybe two years ago, we'd probably over a longer time frame be talking about gradual decline in mine supply as reserves are depleted and so on and so forth. Clearly, we've got a very different economic environment today and that's much more supportive of probably broadly sustaining mine supply at current levels, but I wouldn't expect any significant growth going forwards.
11:21 In terms of recycling supply, the higher prices have been positive for the economics for the recycling companies as well. Interestingly what we're seeing is a lot of end of life catalytic converters that were stockpiled during the period of low PGM prices in the period kind of 2021 through 2024.
11:42 Those catalytic converters are coming through to the market now and that's what's driving that 8% year-on-year growth. Anecdotally, we are hearing from the recyclers that the age of the catalytic converters that they're receiving from the scrap aggregators and the PGM content is changing. The cats they're getting are on average older with lower average PGM content.
12:03 So that would suggest that we're probably getting fairly close to depleting those stockpiled catalytic converters. And so it's possible that looking into 2027 we might see some normalization of the recycling rates. So maybe even a bit of a drop off versus this year. >> Well, interesting to hear about how they held them back and now they're coming out of the woodwork there.
12:23 I know that the WPIC doesn't do price forecasting, but I did want to bring up if you think today's market dynamics are supportive of maybe a new price base for platinum. It seemed like it traded at that rangebound level for years and years. Now, we've seen it get up higher. Is that a secure level for the price, do you think? I mean like you said we don't really comment on or give price forecasts but what I would say is that if you look at how platinum has been trading since the beginning of 2025
12:55 versus how it traded during that long rangebound price period and you do a kind of correlation analysis versus gold. There's been a stark change in how the market is perceiving platinum and it's trading now as part of the precious metal complex whereas in the past the correlation to gold was extremely low.
13:12 In fact it was actually slightly negative. So the correlation numbers for the prior 10 years, 2014 through 2024, the correlation was minus .15 versus gold and since the beginning of 2025 the correlation is pretty close to 0.95 so very highly correlated and I think this goes back to what I was saying earlier about the kind of debasement trade that we saw occurring in the fourth quarter of 2025 and the motivations behind that in terms of US debt to GDP being at the highest ever, concerns around the federal
13:46 balance sheet and concerns around the kind of ongoing federal deficits. Those factors are still here. They haven't changed. And if anything, if the Fed raises rates by 25 basis points, the kind of rising trend we've seen in Treasury yields is only going to continue, which obviously makes it more expensive for the US to service its existing debt pile.
14:06 So, that may bring us back to the fore again. And I think that that's something that kind of suggests that we've probably seen a rerating of the precious metal complex as a whole, a rerating higher. And I think that there's some justification behind that. >> Yeah, I think that's very fair to say, a rerating of the entire precious metals complex.
14:26 As we're coming toward the end here, I wonder if there's anything else you would highlight on the platinum side for investors. Any key takeaways or things that we missed from the latest report? I think the key thing really is just that it's a very constructive environment. We've seen that obviously quite large quantities of metal come back into the market through those investment outflows in the first half of the year, 600,000 ounces, and that was only just enough just to kind of take some of the tightness out of the market. So, we saw lease
14:52 rates come down. They're still not back at normalized levels. They're still slightly elevated, but they have come down quite significantly. We saw the kind of shape of the forward curve in the London OTC market move from backwardation back to being flat but not really into proper contango, seems to be heading back towards backwardation again right now.
15:12 So the market remains very tight. And I think any kind of positive investment inflows are likely to result in further tightness being added to the market in terms of perhaps lease rates going up again, the market heading back into backwardation, into deep backwardation, and that's got quite a big potential impact in terms of platinum's market value establishment through the rest of this year.
15:33 So in a way positive investment flows could become quite self-fulfilling for the investment rationale. And that's something that I think is worth keeping an eye on, especially given the potential for this economic uncertainty to result in a renewal of the debasement trade coming back to the fore.
15:48 >> Well, thank you so much for going over what's happening in the market. I think there's a lot of uncertainty, but we've got a pretty good picture of the path forward for the rest of 2026 and I'm sure we'll check in again before the end of the year as well. >> Brilliant. Sounds great. Thank you, Charlotte.
16:02 >> Of course. And once again, I'm Charlotte McLeod with investingnews.com and this is Edward Sterck with the World Platinum Investment Council. Thank you for watching. [music] If you like this video, make sure you hit the like button and subscribe to our channel. We'd also love to hear your thoughts, so leave [music] us a comment below.
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