Expect a rebound in the price of platinum

Platinum prices, which fell by almost 20% in the past year, are set to recover. Unlike most metals, platinum isn’t well supplied: output in South Africa, which accounts for over half of supply, is continually interrupted by strikes.

The latest stoppage began two weeks ago, and unions and managements seem unlikely to agree on wage levels – which have been climbing across the sector – any time soon; 40% of global output is being lost to the strike every day. Electricity shortages and rising energy costs are also hampering production.

While the market is already in deficit and supply faces disruption, demand is recovering, says Capital Economics. Platinum is used in catalytic converters for diesel cars, making up 40% of overall demand.

Europe is the top market, as 45% of its cars are diesel-powered, compared to an average of 12% elsewhere. Car sales are likely to pick up this year after falling for six years as Europe’s economy recovers.

Platinum is also gaining market share in the jewellery sector (35% of demand).

Investment demand (6%), which comes mainly from exchange-traded funds, should remain steady. All this adds up to a bullish outlook for platinum, with Capital Economics forecasting a price rise of 20%.

• Stay up to date with MoneyWeek: Follow us on TwitterFacebook and Google+

MoneyWeek magazine

Latest issue:

Magazine cover
Heading higher?

Or are house prices set to fall?

The UK's best-selling financial magazine. Take a FREE trial today.
Claim 4 FREE Issues

'Would you rather upset God, or have Him just ignore you?'

In the first of three interviews with Merryn Somerset Webb, Hugh Hendry, manager of the Eclectica Fund, talks about what it takes to be a good hedge fund manager – and how he learned to stop worrying and love central banks.


Which investment platform?

When it comes to buying shares and funds, there are several investment platforms and brokers to choose from. They all offer various fee structures to suit individual investing habits.
Find out which one is best for you.


21 November 1969: The first permanent Arpanet link

A milestone in the formation of the internet, the first permanent Arpanet link was established on this day in 1969 between researchers in the United States.



Fleet Street Letter