China's Policy Shift Ignites Platinum Market Frenzy
Unprecedented Price Surge in Precious Platinum
Platinum, a crucial precious metal, recently witnessed an extraordinary surge in global trading. While other precious metals like gold and silver experienced declines, platinum's value soared by 6.4%, reaching an impressive $1,646 per ounce in the spot market. This remarkable intraday increase marked its highest single-day gain since 2020, highlighting extreme market volatility.
Discrepancy Between Physical and Futures Markets
Interestingly, despite the sharp rise in spot prices, platinum futures only climbed by 4.1%. This created an unusual disparity, with the London spot premium over Nymex futures widening to over $53 per ounce—almost double the previous day's level. Such a divergence, typically uncommon, signals a heightened demand for physical platinum within the market.
Beijing's Tax Rebate Elimination: A Game Changer
The catalyst for this market disruption was Beijing's decision to discontinue a two-decade-old tax incentive. China, the world's largest consumer of platinum, had maintained a value-added tax rebate since 2003. However, the Ministry of Finance announced that this rebate would be phased out starting November 1, affecting both imported and domestically produced platinum, as reported by Bloomberg.
Fair Competition: A New Era for Chinese Platinum Market
Under the previous policy, China Platinum Co. held a unique advantage, being the sole entity permitted to import platinum without the 13% VAT. This exclusive privilege had long stifled competition. The removal of this exemption is considered a pivotal development for China's platinum sector, fostering a more equitable environment for rival companies that previously faced significant disadvantages.
Market Reacts: Premiums Soar Ahead of Deadline
The impending removal of the rebate immediately led to an increase in Shanghai premiums over global prices. This phenomenon suggests that buyers accelerated their purchases of physical platinum to circumvent the upcoming tax adjustments, thereby intensifying the already constrained global supply situation.
Persistent Market Tightness and Supply Chain Vulnerabilities
The current tightness in the platinum market is not a new development. Platinum has been a top-performing commodity in 2025, driven by robust demand from China, particularly in jewelry and investment sectors. London-based banks have also been actively competing for dwindling inventories, further exacerbating the supply challenges.
Geographic Concentration and Structural Deficits
A major vulnerability in the platinum market stems from its highly concentrated mining supply. In 2024, nearly 90% of global production originated from South Africa's Bushveld Igneous Complex, which alone holds approximately 75% of the world's known platinum reserves. This reliance on a single region makes the market susceptible to disruptions.
Long-Term Outlook: Demand Outpacing Supply
Industry experts, including Trevor Raymond, CEO of the World Platinum Investment Council (WPIC), have highlighted a "structural deficit" in the platinum market. Despite rising prices, which typically incentivize increased supply, inventories have not been significantly replenished. The WPIC projects that global demand will continue to exceed supply throughout the current decade, underscoring platinum's growing importance in emerging sectors like the hydrogen economy and advanced laboratory equipment.