Platinum group metals (PGMs) market prices are projected to hit an average of $2,450/oz in 2026, with potential to exceed $3,000/oz by year-end, creating significant earnings leverage for South African producers.
According to Bank of America’s (BofA) latest Global Metals Weekly report, which highlights key trends shaping PGMs market and South Africa’s role in 2026, the surge is driven by persistent global deficits, trade dislocations, and constrained supply growth.
Dated January 9, 2026, the report underscores South Africa’s position as the world’s largest PGM supplier, accounting for a dominant share of global output. Despite operational challenges, the industry is poised for a pivotal year, with higher prices offering a lifeline to producers after years of margin pressure.
Analysts at BofA raised their 2026 platinum forecast from $1,825/oz to $2,450/oz, citing spot prices already reaching $2,446/oz early in the year, while palladium was upgraded to $1,725/oz from $1,525/oz.
This optimism stems from platinum’s constructive fundamentals, including a projected market deficit of 736,000 ounces in 2026, down slightly from 976,000 ounces in 2025 but still signaling tightness.
Modest recovery
South Africa’s PGM sector has faced headwinds, with output dipping approximately 5% year-on-year in the first 10 months of 2025 due to disruptions like flooding and plant maintenance. The report anticipates only a modest recovery in 2026, insufficient to alleviate the global platinum shortfall.
Global production is expected to rise 3.7% to 7.249 million ounces, but consumption will hover around 7.985 million ounces, perpetuating deficits. Palladium, meanwhile, is forecast to shift into a surplus of 232,000 ounces, capping its price upside relative to platinum.
BofA analysts emphasize that South African miners, including majors like Impala Platinum and Anglo American Platinum (via its Valterra subsidiary), are now generating healthy profits at current spot levels—around $800/oz basket margins for even high-cost operations—after losses in 2024.
Trade tensions and external demand
Trade tensions and external demand are amplifying these dynamics. U.S. tariffs loom large, with concerns over potential duties on Russian palladium pushing NYMEX inventories higher and exchange-for-physical (EFP) premiums to record levels above $50/oz for palladium.
The U.S. relies on imports for 85% of its platinum consumption, up from lower levels in prior years, making it a key sink for global stocks. Platinum inventories have surged over 500,000 ounces since November 2024, equivalent to 2.7 months of U.S. demand.
In China, import demand provided additional support in 2025, with jewelry fabrication jumping 108% in the first half before moderating.
The launch of physically backed PGM futures on the Guangzhou Futures Exchange (GFEX) in late 2025 further bolstered prices, as traders sourced physical metal for delivery in ingot or sponge form.
A mere 1% substitution from gold jewelry could widen the platinum deficit by nearly 1 million ounces, or 10% of supply, given gold’s record highs.
Future outlook
Looking ahead, the report highlights a disciplined growth pipeline in South Africa, prioritizing caution over aggressive expansion amid tight margins.
Key projects include Ivanhoe Mines’ Platreef, ramping up from November 2025 to produce 40-50,000 ounces each of platinum and palladium in 2026, scaling to over 200,000 ounces by 2029.
Wesizwe’s Bakubung aims for full production from January 2026, targeting 420,000 ounces annually. Tharisa’s brownfield underground expansion, starting in mid-2026, will boost output to 200,000 ounces by 2029 from current surface levels of 140-160,000 ounces.
Valterra Platinum’s Mogalakwena underground project, the world’s largest open-pit PGM mine, is in feasibility stage, with a potential 10-50% output increase (100-500,000 ounces) post-2030, pending a 2027 investment decision.
Focus shifts to restarts and deferrals
Producers are focusing on restarts and deferrals rather than greenfield risks. For instance, Impala deferred the closure of its Canadian operations to July 2027, adding 180,000 ounces of palladium annually, and retains options to restart the Two Rivers Merensky project (another 180,000 ounces).
BofA notes that long lead times—often years from development to full output—mean supply additions will be gradual, supporting sustained deficits. Industry margins, compressed in North America and South Africa over the past two years, encourage this measured approach.
Strong outlook
Overall, the report paints a strong picture for South African PGMs, with platinum outperforming amid inelastic mine supply and production discipline.
Risks include subdued jewelry demand from rising prices or waning Chinese support, but upsides from further disruptions or underperforming secondary supply could push prices higher.
For SA producers, this translates to enhanced earnings leverage, potentially revitalizing an industry battered by recent downturns.
As global demand from automotive, industrial, and investment sectors holds firm, South Africa’s role remains central, with 2026 marking a potential turning point toward profitability and strategic growth.
