Mixed Messages for Platinum
Source: Mineweb, Lawrence Williams (8/21/09)
". . .the fortunes of the price have been affected strongly by auto sales, which have remained depressed in the Western World. . ."
With the auto industry accounting for a high percentage of platinum usage in catalysts, the fortunes of the price have been affected strongly by auto sales, which have remained depressed in the Western World, but have been strong in China, after an initial recovery from an oversold position.
U.S. auto sales picked up substantially with the old car scrappage system with effective subsidies on new purchases, known as the 'cash for clunkers' program. But, with the program due to end at the beginning of next week, the price has been taking a knock over the past few days, though hardly a decisive one.
Despite falling into the precious metals category by virtue of its relative scarcity, jewelry use can only be classified as important rather than significant at around 20%, with the metal's main usage being as a truly industrial one, and thus demand is dependent very much on the strength of the global economy.
While the big price surge early last year initially stimulated new investment in the platinum mining sector, the slump has led to production cuts at major producers and the slowing down, or cancellation, of many prospective new projects which may still be uneconomic at current prices. South Africa remains the world's largest producer and platinum mining there is mostly relatively expensive due to very narrow deposits, primarily mined by underground methods in a relatively young geological environment, which creates its own problems in terms of high rock temperatures as the mines go deeper.