PGM Outlook Tied to Speed of Japan's Recovery
Source: Kitco, Allen Sykora (3/18/11)
"Japan's auto industry faces hurdles, but not significant production-capacity damage."
PGMs previously softened as oil prices rose due to Middle East-North Africa unrest. However, the most recent declines in PGMs are the result of potential loss of auto-catalyst demand from idled automobile manufacturing in Japan, Goldman says.
"Not only does Japan account for 12.6% of global automobile production, it also accounts for a large share of global industrial PGM consumption: 16.4% for platinum and 18.1% for palladium in 2010," Goldman says.
Auto analysts with Goldman do not expect significant production-capacity damage, but do list two hurdles for car output. These are output disruptions due to power shortages, as well as supply-chain issues as parts suppliers face ongoing problems in the aftermath of the massive earthquake and tsunami that hit Japan last week.