Goehring & Rozencwajg flags bull cycle for PGMs

After years of electric cars overshadowing them, platinum group metals (PGMs) – a key component for internal combustion engine (ICE) vehicles – might be making a strong comeback.

In their first quarter 2025 commentary, New York’s Goehring & Rozencwajg makes a strong case for a new bull cycle. They highlight a key shift in metals’ demand and supply over the last 18 months. It runs discretionary funds of $726 million (C$1 billion), of which the Goehring & Rozencwajg Resources Fund holds $419.6 million in net assets as of April 30.

These trends, they argue, mirror the conditions of the late 1990s that preceded a historic bull market, when PGM miners’ values rose by factors of between 30 and 60. That run ended with the 2008 financial crisis, and the sector has since gone on a 16-year bear cycle.

Goehring & Rozencwajg suggest another PGM renaissance may be coming. This time, the signs hint at a bigger bull run ahead.

Platinum has jumped to a two-year high of $1,095.50 per ounce. Palladium, which was once equal to platinum, is now lower at $1,003.40 an ounce.

ICE, hybrids to drive demand

Despite the common belief that electric vehicles (EV) might make PGMs unnecessary, these metals still see strong demand from ICE vehicle makers. Goehring & Rozencwajg estimate that catalytic converters in ICE vehicles still account for roughly 65% of the PGM demand globally.

The investment firm states that demand for PGMs in the auto sector will stay strong. Research consultancy Thunder Said Energy predicts PGM demand will jump 23% by 2032. This means it could reach almost 23 million ounces. annually.

But, as Goehring & Rozencwajg’s analysis suggests, that is only a conservative case, and PGM demand has even more room to grow as the EV sector continues to underwhelm.

A key driver is the rise of hybrid vehicles, especially plug-in hybrids. They need more PGM loading than regular ICE vehicles, the report suggests. This is because their catalytic converters operate at cooler, less efficient temperatures.

“As hybrids gain share at the expense of both EVs and ICEs, the added PGM intensity becomes an important and underappreciated source of future demand—one that few analysts have yet chosen to highlight,” their report states.

Regulatory trends are also shifting in favour of increased PGM usage. Emissions standards are getting stricter around the world. The EU has its EU7 standards, China has CN7 and India has BS7. All these will need more metal loadings, Goehring & Rozencwajg said. Catalytic converters in Europe already use 7–9 grams of PGMs, compared to 3–4 grams in developing markets, and the gap is narrowing.

Due to tightening emissions standards, 98% of all new vehicles sold worldwide are equipped with catalytic converters, the report adds.

Investments in PGMs, which had collapsed due to high interest rates and bearish sentiment, may also be rebounding. Platinum ETFs have experienced a 75% drop in demand since 2020’s peak. Recently, they have switched from selling to accumulating. This change hints at a revival of investor interest.

Prolonged supply deficit

In support of Goehring & Rozencwajg’s bull case are supply-demand trends pointing to a prolonged period of market deficit. The World Platinum Investment Council estimates that the platinum markets recorded deficits of 750,000 oz. in 2023 and 680,000 oz. in 2024, with another shortfall of 500,000 oz. coming in 2025.

Low production margins have led to a sizeable contraction (400,000 oz.) in South African mine output. According to the WPIC, about 40% of global PGM production is now uneconomic at current prices. Impala Platinum (JSE: IMP; US-OTC: IMPUY) and Anglo American Platinum (LSE: AAL) are facing tight margins. They may also close more mines, like Canada’s Lac des Iles mine.

New supply is limited, with only the Platreef mine in South Africa expected to add significant output – but not until 2029 or later. Meanwhile, above-ground inventories are falling fast, having declined from 5 million oz. in 2022 to an expected 3 million oz. this year.

Recycled supply of PGMs has also come under pressure, down some 300,000 oz. over the last year. A surge in used car prices has resulted in owners holding onto their cars longer and fewer metals recycled.