THE STATE OF METALS 2016: PLATINUM

In the third part of our four-part series on the state of metals, we’re looking at how platinum has performed in the year to date. Like the other precious metals unearthed by the Australian mining industry, gold and silver, platinum weathered the ‘Brexit’ storm much better than the stock markets. But this particular metal had another reason to send prices higher during June.

PLATINUM CONTINUES TO RALLY

The spot price for platinum opened the month at US$979.40 and closed at US$1024.40, less than five dollars away from the US$1029.30 high, a rally of 4.56 percent.

Finance-wise, global ETFs saw a rise of about 10,000 Tozs by the end of June, after the market gained about 25,000 Tozs by mid-month prior to some liquidation. From the evidence so far, investors were not persuaded that platinum has a strong outlook.

Technically, platinum displayed some medium-term strength during the month. Twice it found support at the US$960 level and the second time the price held, the price rallied strongly – perhaps as a result of investors moving money following the UK referendum on leaving the European Union. The basing and consolidating activity seen above the June lows created price targets to US$1085 and US$1097, and these were actually reached in July. In the two months since the end of June, platinum has seen a rise of over two percent.

SO WHAT’S DRIVING PLATINUM BEYOND EXPECTATIONS?

It’s all about the vehicle manufacturing industry. Figures released by the European Automobile Manufacturers Association (ACEA) during June emphasised the growth in EU passenger car registrations. Growth was broad-based across all EU markets, although relatively modest in the UK. Now, the ACEA is now forecasting five percent growth in passenger vehicle registrations in 2016.

Commercial and heavy-duty vehicle growth grew by 16.4 percent in May compared with May 2015, and grew by 12.8 percent in the first five months of the year.

 

The state of metals 2016: platinum

The reason that growth in the number of vehicle registrations matters to the price of platinum is because platinum is used to make catalytic converters, or autocatalysts, which are pollution control devices fitted to cars and trucks. Autocatalysts are getting increasingly complex due to tighter pollution control regulations around the world. Today, over 95 percent of all new vehicles sold are fitted with catalytic converters.

Platinum is just one of the precious metals used in catalytic converters. Palladium is there too and that is the focus of our final blog in our four-part series on the state of metals.

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