Commodity Online
Platinum kept up its strong recent performance, adding 6% in March to close at $1,124/oz, meaning a Q1 2009 gain of 25% -very impressive, considering the background circumstances and very poor industrial demand.

Surveying the wreckage of the international car industry, which accounts for over half of platinum demand in a normal year, this rise seems rather inexplicable. Nevertheless, there are a few hopeful signs that the market is bottoming. In the US, car sales in March were somewhat improved on those for February and January.

For platinum, the European market is of much more importance, and while full data is not yet available, it is for markets covering 77% of European sales, and all these show a year-on-year improvement.

Foremost is Germany, where sales were 401,000 units, 40% higher than in March 2008, as consumers took advantage of the lavish scrappage incentives on older cars. Clearly some, perhaps most, of this extra demand has been brought forward from later months, and sales are likely to fall back sharply.

But by then other markets might be recovering, and it is now providing a useful pickup in demand which has fed through to production, German output was 395,800 vehicles in March, down 19% year-on-year but up 40.5% from February.

Platinum's other industrial uses might also be seeing a slight pickup. In general the industrial metals have rallied - the LMEX metals index, a weighted (by production) average of aluminium, copper, lead, nickel, tin and zinc, rose by 10.6% in March. There are clearly specific factors for all metals, including Chinese restocking, but there has been a slight improvement in business confidence.

This has helped gain speculative interest in platinum; the ETFs now hold 450,290 oz, up nearly 70,000 oz in March, the strongest month since November 2007 and 153,480 oz in Q1 2009, the strongest gain over three months since April 2008. A further boost came from news that UK platinum ETF provider, ETF Securities, had filed with the SEC plans to launch a platinum ETF on the NYSE.

If these plans happen to gain regulatory approval then we estimate that such an ETF could double platinum ETF offtake.

Platinum Outlook
We think platinum's recovery is rather fragile and too much good news has been priced in. Short-term LME fix: $1,050/oz-$1,175/oz.

Some Platinum News
April 1st: South Africa included two PGM industries in its new beneficiation strategy, autocatalyst manufacturing and jewellery. The aim is to increase the value-added from South Africa of its mineral industries.

April 1st: Production at Eastern Platinum’s Crocodile River Mine rose 9% in 2008, to 117,909 oz.

Courtesy: Fortis Metals Monthly