Platinum hits bottom

published 20 March 2015

Platinum has lost its polish. The price of the metal has sunk to below $1,120 an ounce, depths it hasn't plumbed since the aftermath of the global financial crisis six years ago. Demand for the metal has been hit by the weak eurozone economy.

The eurozone is the world's biggest market for diesel cars, which use platinum-based catalytic converters. These account for around 40% of overall platinum demand.

Meanwhile, supply has recovered following a five-month strike in South Africa, the main supplier of mined platinum, in the first half of the year. As a result of increased supply and lower demand, the market deficit (the gap between the two) has shrunk by around 60%.

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But has the slide gone too far? Despite the ongoing threat of Greece leaving the eurozone, the European economy is showing signs of recovery. European car sales recently rose for the first time in six years. The economic recovery in India, along with tighter emissions standards, should stimulate emerging-market demand.

Low prices bode well for jewellery demand, which comprises around 38% of the total. And further strikes in South Africa can't be ruled out. GFMS, a metals consultancy, reckons that there is scope for "a modest uptick" in prices to the $1,300-1,350 range this year.

Andrew is the editor of MoneyWeek magazine. He grew up in Vienna and studied at the University of St Andrews, where he gained a first-class MA in geography & international relations.

After graduating he began to contribute to the foreign page of The Week and soon afterwards joined MoneyWeek at its inception in October 2000. He helped Merryn Somerset Webb establish it as Britain’s best-selling financial magazine, contributing to every section of the publication and specialising in macroeconomics and stockmarkets, before going part-time.

His freelance projects have included a 2009 relaunch of The Pharma Letter, where he covered corporate news and political developments in the German pharmaceuticals market for two years, and a multiyear stint as deputy editor of the Barclays account at Redwood, a marketing agency.

Andrew has been editing MoneyWeek since 2018, and continues to specialise in investment and news in German-speaking countries owing to his fluent command of the language.