SunSirs: Platinum Group Metals Market: Opportunities and Challenges Brought by AI Expansion

Xinhua Finance, Guangzhou, September 11 (Xinhua) – The rapid development of the AI industry has driven “computational power metals” into the market spotlight. Platinum group metals (PGMs) such as platinum, palladium, rhodium, ruthenium, and iridium are embedded in the core links of AI hardware with irreplaceable roles: the growth of optical interconnection crystals relies on iridium crucibles, the weaving of electronic cloths cannot do without platinum-rhodium leakage plates, and hard disk magnetic recording uses platinum-ruthenium as the key coating… Can AI demand reshape the value coordinates of platinum group metals? How strong is their irreplaceability in the AI industry chain? What is the medium-to-long-term support logic for their prices? In response to these questions, the reporter recently interviewed Deng Weibin, General Manager of the Asia-Pacific Region at the World Platinum Investment Council.

Xinhua Finance: Currently, the market is discussing how the AI industry is driving demand for platinum group metals (PGMs). What is your view on the position of PGMs in the AI industry chain? As AI continues to develop in depth, what changes will future demand undergo? Will it further widen the supply-demand gap?

Deng Weibin: Platinum group metals belong to critical metals and play an extremely important role in industry. Regarding the application of platinum group metals in the AI industry, it mainly involves improving operational efficiency and stability. According to our industrial research, the current status of platinum, rhodium, ruthenium and iridium in the AI hardware industry chain cannot be replaced by other metals. Based on the historical trajectory of the industrial demand for platinum group metals, we believe that the economical use of platinum group metals in the AI industry will be the main factor controlling hardware costs in the future; replacing platinum group metals in the AI industry usually involves mutual substitution within the platinum group metal family, and the possibility of being replaced by other metals outside the family is very low.

Currently, we observe that the demand for platinum group metals in the AI industry is rising rapidly with the expansion of the AI industry. However, we must also note that the metal demand in certain segmented sectors stems from the expansion effect of AI infrastructure (for example, the demand for platinum group metals from platinum-iridium crucibles for crystal growth and platinum-rhodium bushings for electronic cloth production can be regarded as a surge during the capacity infrastructure period. When capacity expansion weakens, the incremental demand for platinum group metals will decrease). Therefore, when understanding AI”s demand for platinum group metals, it is essential to distinguish between infrastructure demand and sustained demand.

The development of the AI industry will drive up the total demand for platinum group metals (PGMs), but it cannot be simply inferred that the supply-demand gap of PGMs will widen. For example, 80-90% of palladium and rhodium applications are in the automotive industry. However, the current development of vehicle electrification, especially the rise of pure electric vehicles, has a significant negative impact on the demand for palladium and rhodium. In addition, a sharp short-term growth in metal demand will push up prices, forcing traditional industries to replace PGMs with other materials and squeeze traditional demand. Therefore, when considering the overall balance of supply and demand for PGMs, we also need to look at the changing trend of PGMs demand in traditional industries.

Xinhua Finance: Could you please elaborate on which specific links in the AI industrial chain the main platinum group metals such as platinum, ruthenium, iridium and palladium are applied to, as well as their demand and application potential?

Deng Weibin: In terms of optical interconnection, crystal growth mainly uses iridium crucibles, with a small amount of platinum crucibles; this demand for platinum group metals belongs to infrastructure demand.

For electronic cloth, the production of electronic yarn (the raw material of electronic cloth) requires platinum-rhodium leakage plates, which are mainly made of platinum and supplemented by rhodium. At present, the challenge in the expansion of electronic cloth production lies in the fact that looms are supplied by Japan. In addition, the new generation of electronic cloth (quartz cloth) does not require the use of platinum-rhodium leakage plates and is currently in the R&D stage. If mass production is achieved, it will reduce the demand for platinum and rhodium in this industry, but there will be no impact in the short term.

Humanoid robots require platinum silicone. It is estimated that China’s platinum demand in the silicone industry will reach 6 tons in 2026, a year-on-year increase of 20%. The demand for platinum in China’s silicone industry will continue to grow in the next 2-3 years. Although some overseas technical applications use base metals to replace platinum, such replacement is difficult to achieve in the short term in the Chinese market at present.

Currently, the mainstream hard disk magnetic recording technology is ePMR (Energy-Assisted Perpendicular Magnetic Recording), which mainly uses ruthenium, followed by platinum. It is predicted that the mainstream technology will shift to HAMR (Heat-Assisted Magnetic Recording) in 2 to 3 years, with platinum as the primary material and ruthenium as the secondary. However, the global demand for hard disks will continue to grow due to the construction boom of AI data centers, and the industry’s demand for platinum and ruthenium remains optimistic. We forecast that the total consumption of platinum and ruthenium by the global hard disk industry will exceed 6 tons in 2026.

In the industries of embodied intelligence and low-altitude equipment, platinum nanoparticles can endow flexible tactile sensors with high sensitivity; ruthenium-based chip resistors can ensure the reliability of unmanned aerial vehicle control systems in high-temperature and high-vibration environments.

For brain-computer interfaces and high-end medical devices, platinum-iridium electrode arrays can ensure the long-term biocompatibility and signal stability of implantable devices; platinum-based imaging components can improve the precision of cardiovascular interventional devices.

In addition, the demand for copper foil in circuit boards driven by the development of AI will boost the application of iridium-titanium anodes; the application of palladium in multi-layer ceramic capacitors (MLCCs) in electronic components will increase to improve the stability of capacitors.

With the vigorous development of the AI hardware industry, it is predicted that more relevant new applications will emerge, and we maintain a cautiously optimistic attitude towards the demand for platinum group metals in this industry.

Xinhua Finance: There is a view that “most platinum group metals are still irreplaceable in semiconductor applications.” What do you think of this statement, and how do you think the demand from the AI industry chain will affect the prices of platinum group metals?

Deng Weibin: Based on the current technological trends and the traditional applications of platinum group metals in industry, the application substitutability of platinum group metals in the semiconductor industry is indeed low in the short term. Even if substitution exists, it is only mutual substitution within the platinum group metal family. From a cost perspective, the demand is strong at the current stage of AI development, and the product gross margin is considerable. To enhance market competitiveness, enterprises pay more attention to product quality and stable output, and the possibility of investing a lot of resources in R&D to replace platinum group metals in the short term is low.

However, the sustainability of the development of the AI industry will affect the demand and price of platinum group metals (PGMs), especially the minor metals rhodium, iridium and ruthenium. The transformation of traditional industries will also affect the overall demand for PGMs. However, the factors affecting the price of PGMs are not determined by a single industrial demand or market supply-demand balance; other macro factors including supply security policies, geopolitics and the strength of the US dollar will all have an impact on the price of PGMs.

For example, the United States has conducted investigations into whether import tariffs need to be increased on platinum group metals, whether the geopolitics of mineral resource producing areas restricts or boosts supply, and the commonly held notion that a strong US dollar leads to weak prices of platinum group metals while a weak US dollar stimulates higher prices of platinum group metals. These factors exert varying effects on prices in different economic periods.

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