BEIJING (Commodity Online): Platinum and palladium are riding the gold wave. As gold prices go up, it is the precious metals platinum and palladium that are surging these days. One factor for the soaring prices of these precious metals is the booming Chinese market.
Here is a report on platinum and palladium:
A Johnson Matthey report says that "net global palladium demand is forecast to decline by 3.8 per cent to 6.52 million ounces. Autocatalyst demand will be depressed by lower light duty vehicle production in most regions. Electronics, dental and chemical sector purchases are also set to fall due to the effects of the economic slowdown."
However, the low palladium price will boost physical investment demand and jewellery demand will rise slightly. Total supplies of palladium, including the sale of 960,000 ounces from Russian state stocks, are expected to fall by 1.8 per cent to 7.18 million ounces. The palladium market is therefore forecast to be in oversupply in 2009 by 655,000 ounces.
The existence of a surplus in the palladium market has weighed on the price over recent years. However, investors seem aware of the imbalance between demand and current mine production and are bullish for the palladium price over the longer term. Demand for palladium will benefit from a recovery in vehicle production volumes and if the funds continue to invest the palladium price could rise to $390 during the next six months. However, any weakness in gold and platinum prices or a strengthening of the Dollar may undermine the price with the possibility that palladium could trade down to $290 during the same period."
Meanwhile, the same JM report finds that: "demand for platinum jewelry is surging to a six-year high after a plunge in prices spurred record Chinese consumption, compensating for the weakest usage by carmakers since 2000. Supply will outpace demand by 140,000 ounces, compared with a shortfall of 240,000 ounces last year, after a 33 percent drop in demand from autocatalyst makers, London-based Johnson Matthey said in a report. Chinese jewelry demand will weaken next year while rebounding economic growth will boost vehicle production and may move the market back to a deficit.
Finally, as regards rhodium, the Johnson Matthey analysts conclude that its: "surplus will increase almost seven-fold to 171,000 ounces this year, the most since at least 1985, as demand drops 18 percent to 548,000 ounces because of weaker auto sales and as supply increases 3.5 percent. The metal has climbed 98 percent this year to $2,475 an ounce, according to prices from Johnson Matthey on Bloomberg."
