Platinum, Palladium Glitter on Chinese Demand
Source: Commodity Online (1/10/11)
"Stronger economies and car sales set for brighter days increase demand."
With the economies of several countries looking better and car sales set for brighter days, demand for platinum and palladium is increasing day by day.
Maintaining a bullish outlook on the precious metals in 2011, Global bank HSBC has maintained its platinum-price outlook at an average of $1,750 an ounce in 2011 and upping its palladium outlook to $750 from $675.
"A continued recovery in global automobile production will support both platinum and palladium prices, but should favor palladium," it said.
HSBC said much of the growth in world auto production will come from China and other parts of the emerging world and the U.S., where palladium-rich, gasoline-fired vehicles are preferred to diesel-fired vehicles, which have a heavier platinum weighting.
According to HSBC Analyst James Steel, winner of an LBMA 2010 price-forecast competition in platinum, high prices in China are hurting jewelry demand, but ETF demand for both metals is likely to remain firm in 2011.
"South African platinum supply increases will be limited by a lack of power, available water, technical expertise and a strong rand," he said.
Much palladium is a by-product of Russian nickel and South African platinum production, thus limited supply prospects for increases in these metals will limit palladium output.
"Palladium also stands to benefit from growing concerns that Russian state-owned stockpiles may be depleted," HSBC added.
According to a report from Barclays Capital, holdings in exchange-traded products backed by platinum group metals have hit fresh peaks.
Platinum holdings rose by 1,400 ounces to 1.25 million, while the rise in palladium was 10,000 to 2.25 million.