Despite Spectacular Fall, Platinum Has a Good Long-Term Outlook

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Even if demand does slow next year, ScotiaMocatta predicts that "platinum's penetration into existing and new markets is likely to continue, helped by an ever stringent environmental legislation that is set to see pollution control equipment fitted to more machines.

While the PGMs fall from grace "has been nothing but spectacular," ScotiaMocatta forecasts that platinum should see more demand from jewellery and long-term investment buying. In their 2009 precious metals forecast for PGMs, Scotia also noted that, "remarkably palladium's fundamentals now look tighter and brighter than platinum's, but Russian inventory sales will be key."

Although platinum consumption is highly linked to growth in the developing economies, ScotiaMocatta suggested platinum "is still likely to see negative growth in 2008 as industry destocks, and slow growth in 2009, especially as it now looks like China may see slower growth than was originally thought."

Even if demand does slow next year, ScotiaMocatta predicts that "platinum's penetration into existing and new markets is likely to continue, helped by an ever stringent environmental legislation that is set to see pollution control equipment fitted to more machines." However, the analyst warmed, platinum is losing market share to palladium in gas-driven engines and in diesel catalytic convertors. Nevertheless, as demand for pollution control spread geographically, "and new technology and lower PGM prices make catalytic convertors cheaper, the use is likely to spread."

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