Platinum prices should stay in touch with current 23-year peaks even though key consumers in the vehicle industry are turning to palladium to build the technology to clean up exhaust emissions, analysts told Reuters on Wednesday.
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The news agency said car manufacturers are looking increasingly at the ratios of precious metals used in their anti-pollution systems, mindful of the premium platinum commands over palladium – currently more than $US500 an ounce.
Spot platinum was trading on Wednesday afternoon at $726.00/731.00 an ounce after touching a 23-year high of $730.00 earlier, while palladium was at $209.00/214.00, Reuters said.
The news agency noted that General Motors in May said it was set to switch from platinum to palladium to make its catalytic converters, and analysts say that other firms are making similar adjustments.
“I’ve got absolutely no doubt that the car companies are desperately trying to use up as much palladium and as little platinum as they can get away with,” HSBC Metals analyst Allan Williamson told Reuters.
He reportedly added, however, that he could not see moves towards palladium shifting either market in the short term because of the time it took to switch from one metal to the other and because vehicles powered by diesel could only use platinum.
Rainaldo O’Meara, market research manager for UK refiner Johnson Matthey told Reuters vehicle makers had more to consider than just the base price of the metal.
“It’s a case of looking at whether or not the wider economics work as well,” he reportedly said.
Analysts have speculated that the lead-time for a switch could be anything from six months to three or four years, Reuters said.
Societe Generale economist Stephen Briggs told the news agency the impact of car makers switching metals would not be seen until next year or possibly 2005, but he was bullish for platinum’s medium-term outlook.
“Remember that this really only applies to petrol cars — it doesn’t apply to diesel, and that’s another reason why the Europeans don’t concern themselves quite as much because European cars are very heavily geared to diesel,” he told Reuters.
