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Platinum: A tale of two consumers
Platinum: A tale of two consumers
Summary
- Among platinum ’s diverse sources of demand, European and Chinese consumers remain the core drivers.
- Continuing rising incomes and a growing middle class could continue to benefit platinum jewellery demand in China.
- Tighter emission standards and strong auto sales may add further support to platinum demand in Europe.
Despite tepid growth and continued uncertainty, the global consumer has remained a resilient driving force in many economies. In the case of platinum, the continuation of healthy consumer spending will remain a critical driver for future demand, particularly among two consumer segments which have accounted for nearly 40% of average annual consumption.
Platinum demand is most often associated with the European automotive market, which accounts for 19% of average annual demand for use in catalytic converters for diesel passenger vehicles. What is less recognized is that over the last 5 years the largest contributor to demand (20%) has stemmed from another consumer segment – Chinese jewellery.
Platinum’s fate remains tied to Chinese jewellery and European auto demand
Average Annual Demand (2011-2015) by sector and region
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China’s growing middle class
Platinum jewellery fabrication in China fell approximately 8% last year with signs indicating this trend may persist throughout 2016. The jewellery sector in China has seen an overall slowdown in line with the country’s economic challenges. In response, consumers have tightened their belts, with the memory of last year’s equity market pullback still fresh and weighing on consumer sentiment. The Chinese jewellery industry has also struggled to operate in this economic backdrop as smaller fabricators have been driven out of the market while larger producers have downsized.
Recent changes in consumer preferences and spending habits have also impacted the platinum jewellery market. Last year saw consumer budgets shift to other discretionary purchases such as domestic travel and vacation expenditures. This was doubly impactful for the jewellery market as more consumers were traveling during holidays and foot traffic in jewellery stores fell during periods of traditionally high consumer spending.
China still remains a global growth engine with lots of pent up potential consumption
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Despite these challenges, there are several themes that lend support for the outlook of China’s platinum jewellery demand. China currently has the lowest consumption level relative to its gross domestic product (GDP) compared to the average emerging market economy and well below developed markets. Meanwhile, its share of global GDP was 17% at the end of 2015 and expected to reach nearly 20% by the end of 2021.
China will continue to play a key role in global growth in years to come as it continues to transition from an industrial to consumer driven economy supported by a growing middle class. As income per capita is expected to continue to rise in coming years, this may result in China moving higher up the “consumption ladder”. This would see marginal spending shift from consumer staples like food to consumer discretionary goods and services (like appliances and health care) and eventually reach higher levels of luxury goods.
Given China’s strong cultural taste for jewellery, higher spending capacity of a growing consumer base would likely see jewellery demand persist. China’s growing middle class consumer has already driven several themes which may continue to serve as a boon for platinum demand. While gold jewellery still comprises the bulk of demand, platinum jewellery in China has grown in popularity among younger consumers (millennials), which are a key and growing component of the middle class consumer market. Growing acceptance of platinum jewellery as gifts may be further supported by new product designs and promotions for platinum jewellery targeted at this segment during festivals such as Chinese Valentine’s Day. Additionally, expansion into new consumer markets among China’s third and fourth tier cities may further cement acceptance and expand platinum jewellery demand in the long run.
Tighter emission standards
Another key consumer segment for platinum stems from passenger vehicles in Europe. Platinum is a key component in autocatalysts for diesel engines, which due to tax advantages makes up the majority of the European passenger car fleet.
Despite Europe’s turbulent economy, growth is continuing to recover and consequently European light vehicle sales remain robust and continue to trend higher while overall retail sales in Europe have slumped so far this year. This spells good news for platinum since according to Thomson Reuters GFMS, 84% of European autocatalyst platinum demand in 2015 was used in the light diesel sector.
European car sales continue to trend higher despite slower overall consumer spending
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The Brexit vote appears to have weighed on car sales in July as European light vehicle sales fell 1.7% year over year and July new passenger car registrations fell 30% in the United Kingdom (UK) from the prior month. The full impact on European car sales emanating from Brexit remains uncertain, but July UK retail sales rose 5.9%, beating expectations, which may signal Brexit’s impact on the consumer was temporary. Overall, the European auto industry remains buoyant with improving employment and low financing costs may continue to entice consumers in other economies as well.
What should help soften any potential impact from Brexit on European car sales is the continued utilization of diesel engines and increased loadings of platinum used in diesel autocatalysts to meet higher emission and fuel efficiency standards. While diesel vehicles in Europe generally have lost market share in recent years to gasoline engines (which utilize palladium over platinum in autocatalysts), the introduction of the Euro 6 emission standards in 2015 helped offset this secular trend and may continue to positively impact platinum demand in years to come.
Eur0 6 put tougher limits on nitrogen oxide (NOx) emissions for automakers. While autocatalysts are not the primary technology to abate NOx emissions (lean NOx traps and selective catalytic reductions are used in the after-treatment for this purpose), according to Johnson Matthey, platinum can help optimize the process. Metals Focus estimates that this increased the average platinum loadings in catalysts by 10% in 2015 to compensate for the new emission standards, a trend likely to persist this year.
Going forward further reliance on diesel engines will remain a key component for automakers to meet European fuel efficiency targets. By applying the latest after treatments, diesel engines generate less pollution and offer better fuel efficiency than gasoline engines.
Investment Outlook
Platinum has risen 26% year to date as it has caught up to the strong year to date performance of its precious metal peers, gold and silver. Unlike gold and silver, which have seen a large influx of investor demand through exchange traded products (ETP) flows, platinum ETPs have seen slight net redemptions globally so far in 2016. The driver of platinum appears to be futures market contracts held by money managers. Should ETP investors also engage in buying platinum we could see the metal gain a second wind. In the long term, the fundamentals for platinum supply and demand remain constructive.
Speculative investors have driven the year to date rally in platinum so far
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For more information contact:
ETF Securities Research team
ETF Securities (UK) Limited
T +44 (0) 207 448 4330
E infoUK@etfsecurities.com
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This communication has been provided by ETF Securities (UK) Limited (”ETFS UK”) which is authorised and regulated by the United Kingdom Financial Conduct Authority (the ”FCA”).
When being made within Switzerland, this communication is for the exclusive use by ”Qualified Investors” (within the meaning of Article 10 of Section 3 of the Swiss Collective Investment Schemes Act (”CISA”)) and its circulation among the public is prohibited.
• Top Performer: Defence (+$7.87 billion)
• Emerging Themes: Cybersecurity (+$318 million), Uranium (+$253 million)
European thematic UCITS ETFs posted a dramatic resurgence in the first half of 2025, with net inflows of $8.73 billion year-to-date, according to ARK Invest Europe’s latest quarterly update detailing H1 2025 European thematic ETF flows.
The turnaround marks a decisive reversal from the muted flows of 2024 ($308 million net outflows for the whole of 2024), as investors rotate back into forward-looking, innovation-driven themes with clearer earnings visibility.
Defence remains the dominant thematic allocation, capturing $7.87 billion in combined net inflows between Global ($4.81 billion) and European ($3.05 billion) defence ETFs underscoring its evolution from a tactical trade to a structural portfolio allocation. Maintaining its position as the defining technological theme, AI ETFs saw $904 million in net inflows, with investor appetite fuelled by relentless innovation in large language models, robotics, and autonomous systems.
In the same period, Cybersecurity ETFs continued to rebuild momentum after significant outflows in 2024 ($311 million net outflows for H1 2024), drawing $318 million, reflecting growing investor conviction in cybersecurity as a structural necessity amid rising digital threats.
Clean Energy ETFs saw outflows of $307 million. As policy momentum stalls in key markets, investors are increasingly selective within the energy transition space. Capital is rotating toward subsectors with clearer economic moats, such as nuclear and grid infrastructure. Supporting this sentiment, Uranium ETFs rank fifth at $253 million, reflecting growing investor interest in the nuclear sector as a potential solution to global energy needs.
Healthcare Innovation ETFs recorded net outflows of $279 million. The drawdown reveals investor caution around legacy biotech firms with uncertain drug pipelines and reimbursement risks. Interest is shifting toward AI-driven healthcare platforms offering faster innovation cycles and more scalable business models.
Electric Vehicles and Battery Tech ETFs saw net outflows of $203 million as investor enthusiasm cools amid subsidy rollbacks and plateauing EV demand in major markets. Persistent concerns around battery raw materials and production bottlenecks have further weighed on the theme.
Rahul Bhushan says, “After a cautious 2024, it’s evident that investors are re-engaging with innovation themes that offer clearer earnings visibility and resilience in an increasingly complex macro landscape. We’re seeing investor conviction in megatrends with structural tailwinds, particularly defence, AI, and energy security. Thematics are no longer just tactical bets, they’re core strategic exposures.”
2025/2024 Comparative Study
Thematics are back
After a weak 2024, investor appetite for thematic risk has returned in force:
• H1 2025 total net inflows: +$8.74B
• That’s a sharp reversal from -$791M in H2 2024 and only +$483M in H1 2024
• The rotation is clear: capital is moving back into forward-looking themes with stronger earnings visibility.
Defence is now a structural trade
• Global and Europe Defence saw a combined $7.87B in inflows in H1 2025 and $1.59B in June alone.
• This continues a multi-quarter surge as geopolitical tensions, rising military budgets, and renewed industrial policy drive long-term allocations.
• Defence is no longer a tactical trade—it’s becoming a core exposure.
AI inflows normalise, but conviction remains
• Artificial Intelligence ETFs drew $904M in H1 2025, following $1.47B in H1 2024.
• Inflows may be slowing, but investor conviction is holding firm.
• With earnings delivery now catching up to narrative, AI remains a centrepiece of thematic portfolios.
Cybersecurity shows signs of stabilisation
After brutal outflows in 2024 (-$311M H1, -$260M H2), cybersecurity ETFs finally saw inflows:
• $318M in H1 2025, including $67M in June.
• This rebound suggests investors are once again prioritising digital resilience in an AI-driven world.
Infrastructure themes are quietly regaining traction
• Global and Europe Infrastructure ETFs pulled in $284M in H1 2025, following modest gains in H2 2024.
• Infrastructure is benefiting from government stimulus, defence modernisation, and the reshoring trade.
Uranium’s steady climb continues
• $253M in H1 2025, after $216M in H2 2024 and $67M in June alone.
• Indeed, the $67M in June alone nearly matches the $66M pulled in during the entirety of H1 2024.
• A rare clean energy theme that’s bucking the downtrend, reflecting growing recognition of nuclear as a pragmatic decarbonisation solution.
Clean Energy sentiment is so bad, it might be investable
• Outflows across all periods: -$307M (H1 2025), -$505M (H2 2024), -$409M (H1 2024)
• June 2025: A mere -$8M
• Sentiment is arguably as negative as it’s ever been—yet structural drivers remain in place. The setup for a contrarian rebound is building.
About ARK Invest Europe
ARK Invest International Ltd (”ARK Invest Europe”) is a specialist thematic ETF issuer offering investors access to a unique blend of active and index strategies focused on disruptive innovation and sustainability. Established following the acquisition of Rize ETF in September 2023 by ARK Investment Management LLC, ARK Invest Europe builds on over 40 years of expertise in identifying and investing in innovations that align financial performance with positive global impact.
Through its innovation pillar and the ”ARK” range of ETFs, ARK Invest focuses on companies leading and benefiting from transformative cross-sector innovations, including robotics, energy storage, multiomic sequencing, artificial intelligence, and blockchain technology. Meanwhile, its sustainability pillar, represented by the ”Rize by ARK Invest” range of ETFs, prioritises investment opportunities that reconcile growth with sustainability, advancing solutions that fuel prosperity while promoting environmental and social progress.
Headquartered in London, United Kingdom, ARK Invest Europe is dedicated to empowering investors with purposeful investment opportunities. For more information, please visit https://europe.ark-funds.com/
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