Global Demand for Platinum and Palladium Declines


". . .in North America. . .demand for platinum plummeted by almost 25%."

A slump in production of vehicles, where platinum finds its major use, saw demand for the metal plummet for the first time in eight years and the trend is expected to continue in 2009, say analysts.

Analysts in Dubai and London said even though they expect the demand for jewelry with platinum component to continue to rise in 2009, the severe erosion of industrial demand will ensure that the demand for the metal climbs down to even lower levels.

The price of platinum is expected to range between $900 (Dh3,305) and $1,375 per ounce and that of palladium between $170 and $325 for the rest of 2009, according to GFMS.

Apparently, the forecast platinum prices correlate with that of gold prices for the rest of the year.

The most glaring drop in platinum demand was recorded in North America, where demand for platinum plummeted by almost 25%. A substantial decline was also recorded in Europe, the world's largest market for light duty diesel, with demand falling by 6%. These declines were partly offset by relative stability in Japan and modest gains in China and some other markets, according to GFMS.

The outlook for 2009 is extremely modest, according to analysts.

Peter Ryan, GFMS Senior Consultant, said an expected 15% drop in vehicle production may lead to a similar decline in platinum and palladium markets.

The intra-year drop in demand for platinum and palladium in 2008 was the highest ever, analysts said. A huge amount of investment had flown into platinum and palladium markets last year, propelled primarily by investments into exchange-traded funds (ETFs), GFMS said. In March last year, platinum prices surged to an all-time high of $2,200 and that of palladium to its highest level since 2001.

Related Articles

Get Our Streetwise Reports Newsletter Free

A valid email address is required to subscribe