Higher Diesel Prices Adverse for Platinum

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One of the great advantages platinum has enjoyed over the last decade compared with palladium is the trend away from gasoline-powered cars to those using diesel. This trend has been most evident in Europe. Until recently diesel engine vehicles could only use platinum-based catalysts, but the price gap between platinum and palladium has encouraged autocatalyst producers to use less platinum and increase the volume of palladium in autocatalysts.

The diesel revolution in the European Union that drives demand for platinum and palladium is unlikely to reverse itself, but EU drivers will progressively divert from diesel vehicles if the diesel price remains significantly higher than the price of gasoline.

The Fortis/VM Group says in its latest metals report the ratio of sales between diesel and gasoline engine cars naturally has implications for the relative prices of the two metals.

One of the great advantages platinum has enjoyed over the last decade compared with palladium is the trend away from gasoline-powered cars to those using diesel. This trend has been most evident in Europe.

The report said that until recently diesel engine vehicles could only use platinum-based catalysts, but the price gap between platinum and palladium has encouraged autocatalyst producers to use less platinum and increase the volume of palladium in autocatalysts.

However, a bigger threat to this important industrial demand for platinum is that diesel's main selling point - its greater fuel efficiency over gasoline - has been substantially eroded by the higher retail cost of diesel compared with gasoline.

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