Platinum and palladium prices have continued to rally into early 2026, driven by persistent supply tightness, trade-related disruptions and stronger-than-expected physical demand, according to Bank of America Global Research’s Global Metals Weekly published on January 9.
The report notes that platinum spot prices reached about US$2 446/oz, exceeding previous forecasts, prompting Bank of America to raise its 2026 average platinum price expectation to US$2 450/oz. Platinum is expected to continue outperforming palladium, supported by a sustained market deficit, with global platinum consumption projected to exceed production to at least 2027.
South African supply constraints were a contributing factor to the tight platinum market in 2025. The report states that mined platinum group metal (PGM) output from South Africa declined by around 5% year-on-year between January and October 2025, largely due to operational challenges such as flooding and plant maintenance. Although a moderate recovery in output is expected, Bank of America does not anticipate this to be sufficient to eliminate the platinum deficit in 2026.
From an energy-sector perspective, the report indicates that higher platinum prices have restored profitability across major PGM producers, including those operating in South Africa. At current price levels, even higher-cost operations are reported to be generating positive margins after losses in 2024. This suggests a reduced likelihood of near-term mine closures and supports continued operation of electricity-intensive mining and processing assets rather than rapid capacity expansion.
However, the report also emphasises that any supply response is expected to be gradual. Producers are likely to prioritise life-extension measures, phased ramp-ups and the restart of assets previously placed on care and maintenance rather than fast-tracked greenfield developments. Long project lead times and capital discipline are expected to limit sudden increases in output.
