Platinum rally runs out of steam as nearterm outlook tilts shortPlatinum Futures (Oct 2025)NYMEX:PLV2025mintdotfinanceThe Rally That Looked Unstoppable Through the spring and into early summer, platinum looked like it had finally broken free of its long-standing range. From April to late June, prices surged over 36% to hit 11-year highs above $1,500/oz. The move was powered by a perfect storm of short-term drivers. China was the first spark. In April and May, imports jumped to the strongest monthly volumes in a year, driven by a rebound in jewellery demand and the kind of bargain-hunting Chinese buyers are known for when a metal is still “out of favour.” Source: Bloomberg In recent years, China’s surplus platinum build has steadily removed metal from the global pool, tightening availability elsewhere. The smaller 2025 figure reflects data only through June, which, if annualised, is on pace with prior years. The physical pull was also amplified by U.S. tariff fears. Although platinum was eventually spared from the April tariff list, the initial uncertainty yanked metal into NYMEX warehouses, draining those of London and Zurich. Source: Bloomberg This created localised tightness and premiums, spiking lease rates to levels not seen in years. Even after easing from July’s extreme of over 35%, the implied one-month rate is holding above 10%, a far cry from the near-zero levels typical in stable conditions. Rates at this level reflect a market where physical metal is scarce and owners are demanding substantial compensation to lend it out. Source: Bloomberg At the same time, South Africa, the source of nearly three-quarters of global mined platinum, was struggling through weather damage, power grid instability, and refinery bottlenecks. Q1 output slid to 715,000 ounces from 1.16 million ounces a year earlier, a 38% decline YoY. Even U.S. policy gave a boost. On July 4, a bill ending EV subsidies and relaxing emission penalties was signed, effectively making internal combustion engines (ICE) more attractive near-term. Automakers stockpiled catalytic converter metal ahead of the change, adding another layer to already feverish demand. When the Fuel Runs Low But the same factors that propelled the rally are now starting to lose their force. Chinese physical buying has slowed sharply since prices broke above roughly $1,050/oz. The country’s import pullback leaves the market without its most aggressive marginal buyer, and without a fresh demand impulse, prices have begun to drift. The tariff-driven warehouse reshuffle has also cooled. Lease rates remain elevated versus normal, but they’ve fallen from the panic highs of June. The term structure is less steep, and options skew, which blew out during the rally, has moderated. In past cycles, those reversals have lined up with corrections. South African supply is staging a recovery in H2, with the worst of the weather and maintenance disruptions behind it. Meanwhile, the July auto catalyst stockpiling in the U.S. was always going to be front-loaded. Without a sustained change in global policy, the longer-term trend of muted ICE vehicle demand still hangs over platinum’s largest use-case. Source: Sprott Even investor enthusiasm is showing cracks. ETF holdings in North America had been climbing through the rally but have turned patchy in recent weeks. Several funds saw profit-taking, leaving futures traders without an investment-flow tailwind to fall back on. Deficits Without Danger The World Platinum Investment Council’s Q1 update still projects a large market deficit for 2025, between half a million and nearly a million ounces. But deficits don’t bite the same way when there’s a stockpile buffer. Above-ground inventories remain around 9 million ounces, equivalent to roughly 14 months of demand. That is more than enough to bleed into the market when tightness indicators flare, taking the sting out of the “shortage” narrative. There’s also a price-risk valve in the form of palladium. The auto industry has flexibility in catalyst metal choice, and a platinum premium over palladium approaching 30% would tempt manufacturers to reverse-substitute away from platinum. Why the Balance Now Tilts Short The rally’s foundation, which is a combination of China’s aggressive buying, microstructure stress, and front-loaded industrial demand, is now eroding. Technicals confirm the shift: momentum indicators like RSI are rolling over, with platinum trading below the 9-day moving average for the first time since the rally began: Term structure and skew are normalising, lease rates are easing, and the physical market is no longer under siege. That doesn’t mean platinum can’t spike on a headline; this market has a history of violent squeezes. But in the absence of a new catalyst, the path of least resistance near-term is lower. Any bounce into resistance offers an opportunity to build a short, with stops placed to respect the risk of sudden microstructure shocks. The bullish story that carried platinum to multi-year highs was compelling because every driver pointed the same way. Now, most of them are pointing the other. That is when short setups work best; not by betting against strength, but by recognising when the strength itself is running out of air. Hypothetical Trade Set-up With October platinum futures consolidating after an 11% drop from the July peak and failing to break decisively above $1,360, fading physical tightness and softening demand momentum set up a tactical short. Traders can deploy CME Platinum PLV2025 Futures to express this view. Each contract requires margin of $5000. Alternatively, traders could deploy the micro platinum futures which provide exposure to 1/10th the notional of the standard contract. Entry: $1,340/oz (current price) Target: $1,296/oz (recent swing low) Stop Loss: $1,370/oz (recent pivot resistance) Profit at Target: Contract size: 50 troy ounces Price move: $1,340 – $1,296 = $44 $44 × 50 oz = $2,200 per contract Loss at Stop: Price move: $1,370 – $1,340 = $30 $30 × 50 oz = $1,500 per contract Reward-to-Risk Ratio: 1.47× MARKET DATA CME Real-time Market Data helps identify trading set-ups and express market views better. If you have futures in your trading portfolio, you can check out on CME Group data plans available that suit your trading needs tradingview.com/cme. DISCLAIMER This case study is for educational purposes only and does not constitute investment recommendations or advice. Nor are they used to promote any specific products, or services. Trading or investment ideas cited here are for illustration only, as an integral part of a case study to demonstrate the fundamental concepts in risk management or trading under the market scenarios being discussed. Please read the FULL DISCLAIMER the link to which is provided in our profile description.