(Bloomberg) — Platinum extended this year’s surge to 40%, as the market strains under signs of tightness.

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The price of platinum — used in jewelry and autocatalysts, as well as in the chemical and glass industries — rose as much as 4.6% to $1,275.45 an ounce on Wednesday. After trading largely sideways at around $1,000 for the best part of a decade, the white metal is now at the highest in more than four years.

The gains come as the physical platinum market heads for another year of deficit, boosted by strong Chinese demand for a cheaper alternative to gold jewelry. A dramatic outflow of platinum to the US in the first few months of 2025 — over fears that imports would be subject to President Donald Trump’s tariffs — further tightened the availability of the metal in the largest spot trading hubs of Zurich and London.

The implied cost of borrowing the precious metal for one month reached the highest in two decades at an annualized rate of 15%, while forward prices for platinum are trading a steep discount to spot, both indications of tightness.

“It’s been a long time coming, but the investor space is starting to buy into the platinum tightness now,” said George Heppel, an analyst at BMO Capital Markets.

Platinum output in South Africa — by far the world’s biggest producer — has declined this year amid heavy rains and other disruptions. That’s helped to underpin the price gains, boosting the shares of miners such as Anglo American Plc spinoff Valterra Platinum Ltd. and its rivals Impala Platinum Holdings Ltd. and Sibanye Stillwater Ltd.

Those producers have come under pressure from the worldwide rollout of electric vehicles, which don’t use platinum or sister metals palladium and rhodium. The biggest single source of demand for platinum is as an input into autocatalysts, which curb emissions from combustion engines in gasoline and diesel vehicles. That continues to weigh on the longer-term demand outlook.

“Platinum is a sunset market, it’s a market declining in size,” said Heppel. “It’s a simple fact that if you have a market where demand is decreasing, but supply is decreasing faster, then the market is gonna face shortages even if the size of the market is declining.”