Key Points
- China approves platinum and palladium futures and options on the Guangzhou Futures Exchange.
- Futures allow sponge and ingot delivery, strengthening hedging and market liquidity.
- The move creates an onshore pricing benchmark for platinum group metals.
China has approved the launch of platinum and palladium futures and options contracts on the Guangzhou Futures Exchange, Heraeus reports. The new contracts allow both sponge and ingot forms of the metals for physical delivery, a world first among major futures markets.
Boosting hedging and price discovery
Heraeus, a Hanau-based precious metals company, said the derivatives will improve domestic hedging capacity and support price discovery.
Over time, the contracts could broaden market participation, increase liquidity, and establish an onshore pricing benchmark for platinum group metals.
The development comes amid structural adjustments in China’s platinum market following the removal of a value-added tax exemption on platinum imports on November 1.
The policy initially spurred trading activity on the Shanghai Gold Exchange, with volumes averaging 982 kilograms per day in late October and driving one-month platinum lease rates to 25 percent. Since the exemption was removed, turnover has fallen sharply, averaging just 30 kilograms per day.
China’s global platinum demand
China remains the largest consumer of platinum, accounting for nearly 30 percent of global demand in 2024. Demand breakdown includes automotive use at 17 percent, jewelry 20 percent, industrial 31 percent, and investment 32 percent.
Investment bars of 500 grams or more accounted for the majority of the investment segment. China also plays a leading role in industries that rely on platinum group metals.
Heraeus highlighted that allowing delivery of sponge is transformative for industrial users and automakers, as this is the primary form used in manufacturing. No other major exchange offers sponge delivery.
The futures provide a new mechanism for businesses to hedge price risk and manage operations. Hedging could lower premiums on platinum jewelry and investment products and reduce discounts on buybacks.
Smaller PGMs and technology demand
Heraeus noted that demand for rhodium, ruthenium, and iridium is rising in technology sectors. DigiTimes reported that hardware and semiconductor manufacturers are struggling to meet artificial intelligence-related demand, with delivery lead times for hard disk drives exceeding two years.
Cloud providers are turning to solid-state drives to meet demand, although these are more expensive. Hard disk drive production remains constrained, limiting inventory flexibility.
If demand persists into 2026, drive manufacturers may expand production, increasing demand for ruthenium. Prices for smaller PGMs were stable last week.
Palladium and rhodium in the automotive sector
Heraeus reported that palladium and rhodium demand in autocatalysts is being affected by the rapid adoption of battery electric vehicles. For the first time, electric vehicles made up more than 50 percent of new car sales in China in October.
Overall battery electric vehicle sales rose 8.8 percent year-on-year to 3.3 million units. Strong exports and government trade-in subsidies supported domestic light vehicle growth.
Heraeus, with five trading and fifteen production and recycling sites, supplies precious metals to the automotive, chemical, semiconductor, pharmaceutical, hydrogen, and jewelry industries.
