Commodity Online
JOHANNESBURG: Auto sales are down across the globe, recession is taking heavy toll on retail sales and platinum demand is down to record lows causing the metal stocks piling up in Swiss vaults.

Global automotive demand has come down drastically in this recession period and experts say platinum price gains would be subdued.

Analysts added that but palladium stocks were still falling, and while there was still more than enough palladium available for industry and investors, the price was starting to firm.

South Africa is world’s biggest producer of platinum, which accounts for 35% of its mining output, and the second-biggest producer of palladium. Prevailing rand strength, combined with a subdued price outlook, would hit platinum companies and SA’s export earnings.

Given platinum’s fundamentals and factors such as SA’s pay talks and possible approval of exchange traded funds (ETFs) in the US it is likely that the prices will dip to find further support from longer-term investors.

Palladium posted the strongest of the precious metals gains in the June quarter, closing at 250/oz. It was vulnerable to short-term weakness but could test 258-262 as it was increasingly substituted for platinum in vehicle autocatalysts.

Investment bank UBS recently reported Swiss stocks of platinum were at their highest level since 2007 as platinum destined originally for autocatalyst manufacturers had to be stored into Swiss vaults. Unless the global economic outlook improved significantly, the price of platinum could drop to 1125/oz.