[miningmx.com] — THERE has been a sharp shift in motor vehicle manufacturers’ preferences from platinum to palladium in the past two years.
By 2008 to 2009, platinum had just become too expensive relative to palladium. Another reason is that motor manufacturers in the East, and apparently in the US as well, in fact prefer palladium as a catalyst. In addition, the small diesel engines that European manufacturers like to use in their vehicles are the main source for the demand for platinum as a catalyst. And the European economy (like its vehicle sales) is not doing well.
Platinum is currently not expensive relative to palladium.
In fact, if you look only at the price difference of 2008-2009 when platinum was nearly five times more expensive than palladium, you could easily get the wrong impression that there isn’t too much risk of excessive substitution at the moment. However, investors should not set too much store by this.
The price of platinum is already high, because it’s riding on the back of the gold price, which is in turn riding on the back of the uncertainty in the world’s financial markets. However, gold is clearly losing some of its lustre, though no major fall in the price is expected.
On the other hand, local platinum producers, with Anglo Platinum in the lead, seem to have an insatiable need to continue producing more and more ounces every year. The supply-and-demand situation in the platinum market already looks suspect, and investors should perhaps avoid the shares until platinum.
– The article first appeared in Finweek. If you want to subscribe to the digital format of Finweek visit www.zinio.com.
