Platinum ETFs: Will Automotive Catalysts Sustain Platinum Demand?

Platinum, a precious metal prized for its rarity and unique catalytic properties, has long been a critical component in automotive catalytic converters. But with the rise of electric vehicles (EVs) and shifting industrial demands, a crucial question arises: Can the automotive industry, specifically through catalytic converters, continue to sustain platinum demand, and what role do Platinum ETFs play in this landscape?

The Role of Platinum in Automotive Catalysts

For decades, platinum has been essential in reducing harmful emissions from gasoline and diesel vehicles. Catalytic converters, devices fitted to vehicle exhausts, use platinum to catalyze chemical reactions that convert pollutants like hydrocarbons, carbon monoxide, and nitrogen oxides into less harmful substances. In 2024, the automotive sector accounted for approximately 44% of global platinum consumption, underscoring its importance in meeting stringent emission standards. Platinum is effective as a catalytic agent because it can be melted down and reused repeatedly without losing its value.

Platinum ETFs: An Overview

Platinum ETFs (Exchange Traded Funds) provide investors with a way to invest in platinum without directly owning the physical metal. These ETFs offer several benefits:

Diversification: Platinum ETFs allow investors to diversify their portfolios by adding exposure to a different asset class than stocks and bonds.
Accessibility: They are easily accessible through brokerage accounts, making them convenient for individual investors.
Liquidity: Platinum ETFs offer high liquidity, enabling investors to easily buy and sell shares on stock exchanges.
Cost-Effectiveness: Compared to physical platinum investments, ETFs generally have lower expenses, minimizing costs for investors.

Some of the top platinum ETFs in 2025 include:

Abrdn Physical Platinum Shares ETF (PPLT): The largest platinum ETF, with approximately $1.6 billion in assets under management as of September 2025. Its portfolio consists of platinum bars stored in a JPMorgan Chase vault in London.
GraniteShares Platinum Trust (PLTM): Another option that tracks the performance of the price of platinum and is physically backed in a vault domiciled in London, United Kingdom.
iShares MSCI Global Metals & Mining Producers ETF (PICK): While not a pure play on platinum, this ETF offers indirect exposure through a portfolio of global mining stocks, including those involved in platinum extraction.

Automotive Demand: A Shifting Landscape

The automotive industry’s influence on platinum demand is undeniable, but several factors are reshaping this relationship:

Electrification: The increasing adoption of EVs, which do not require catalytic converters, poses a long-term threat to platinum demand. However, internal combustion engine (ICE) vehicles (including hybrid vehicles) are still expected to account for the majority of new vehicles produced to 2040.
Substitution: Automakers have been exploring the substitution of platinum with palladium in gasoline autocatalysts to reduce costs. However, platinum is increasingly being used in gasoline autocatalysts as a substitute for more costly palladium.
Emissions Standards: Increasingly stringent emission regulations worldwide are driving higher platinum loadings in catalytic converters, offsetting some of the demand loss from electrification. For example, Europe’s upcoming Euro 7 standards are expected to increase platinum loadings in vehicles.
Hybrid Vehicle Popularity: As EV charging infrastructure plays catch-up, the auto industry has begun to treat hybrids as a sensible bridge technology. They are less expensive to manufacture than batteries for full-blown EVs and simpler to market to customers who aren’t yet willing to abandon the pump. That means demand for platinum group metals, particularly as gas emissions regulations become tighter around the world.

Despite increasing battery electric vehicle (BEV) production, forecasts indicate that ICE vehicle drivetrains (including hybrid vehicles) will continue to account for the majority of new vehicles produced to 2040.

The Hydrogen Economy: A Potential New Driver

While electrification presents a challenge, the emerging hydrogen economy offers a promising new avenue for platinum demand. Platinum is a crucial catalyst in both:

Electrolyzers: Used to produce hydrogen from water.
Hydrogen Fuel Cells: Used in fuel cell electric vehicles (FCEVs), where platinum catalysts convert hydrogen and air into water, generating electricity to power the vehicle.

FCEVs require significantly more platinum than traditional catalytic converters. The World Platinum Investment Council (WPIC) sees the hydrogen industry as possibly the largest platinum demand segment by 2040, especially as hydrogen is expected to replace diesel in heavy transport in the U.S. and in Europe.

Supply Dynamics and Market Deficits

The platinum market has been characterized by supply deficits in recent years. The WPIC forecasts a deficit of 692,000 ounces in 2025, marking the third consecutive year of deficits. Factors contributing to this include:

Declining Mine Output: South Africa, which accounts for more than half of global platinum production, faces challenges such as aging infrastructure and operational disruptions, leading to reduced output.
Recycling Bottlenecks: Recycling rates have plummeted to a 10-year low due to fewer end-of-life vehicles and logistical challenges, further constraining supply.

However, the platinum market is expected to move to being in balance in 2026, with a forecast 20 koz surplus. This is dependent upon an easing of tariff fears, allowing a forecast 150 koz outflow from stocks held on exchange, and a higher platinum price prompting 170 koz of profit taking from exchange traded funds (ETFs).

Investment Considerations

Investing in platinum ETFs involves certain risks and benefits:

Pros:

Diversification: Platinum ETFs can diversify a portfolio and reduce risk.
Hedge against inflation: Platinum can hold its value better than the U.S. dollar.
Convenience: Platinum ETFs can be bought and sold through a brokerage account.
Direct exposure: Investing in platinum ETFs provides direct exposure to platinum prices without having to own the physical metal outright.

Cons:

Volatility: Platinum prices are more volatile than those of gold and silver.
Management fees: Platinum ETFs don’t quite match the price of platinum because of the expense ratio.
Underperformance: Platinum has some growth potential, but stocks are a better choice for growth-oriented investors.

Conclusion

The future of platinum demand is complex, with both challenges and opportunities. While the rise of EVs may curb demand from traditional catalytic converters, stricter emissions regulations and the potential of the hydrogen economy could provide new sources of demand. For investors, platinum ETFs offer a convenient way to gain exposure to this precious metal, but it’s crucial to carefully consider the risks and potential rewards before investing.

Disclaimer: This blog post is for informational purposes only and does not constitute financial advice. Investors should conduct their own research and consult with a qualified financial advisor before making any investment decisions.