Platinum hits bottom

Weakness in the eurozone has hit the price of platinum.

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%.

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.

Recommended

Barry Norris: we’re already in the 1970s. Here’s how to invest
Investment strategy

Barry Norris: we’re already in the 1970s. Here’s how to invest

Merryn talks to Barry Norris of Argonaut capital about the parallels between now and the 1970s; the transition to “green” energy; and the one sector w…
19 May 2022
Is the oil market heading for a supply glut?
Oil

Is the oil market heading for a supply glut?

Many people assume that the high oil price is here to stay – and could well go higher. But we’ve been here before, says Max King. History suggests tha…
16 May 2022
Why investors should consider adding Glencore to their portfolios
Share tips

Why investors should consider adding Glencore to their portfolios

Commodities giant Glencore is well placed to capitalise on rising commodity prices and supply chain disruption, says Rupert Hargreaves. Here’s why you…
13 May 2022
How to invest in the multi-decade boom in industrial metals
Industrial metals

How to invest in the multi-decade boom in industrial metals

The price of key industrial metals has already begun to rise. The renewable energy transition will take them higher, says David Stevenson. Here's how …
6 May 2022

Most Popular

Scottish Mortgage Investment Trust has fallen hard. But is now the time to buy?
Investment trusts

Scottish Mortgage Investment Trust has fallen hard. But is now the time to buy?

After a spectacular couple of decades, the Scottish Mortgage Investment Trust has fallen by almost 45% so far this year. Rupert Hargreaves asks if no…
26 May 2022
The world’s hottest housing markets are faltering – is the UK next?
House prices

The world’s hottest housing markets are faltering – is the UK next?

As interest rates rise, house prices in the world’s most overpriced markets are starting to fall. The UK’s turn will come, says John Stepek. But will …
23 May 2022
Is it time to pick up growth stock bargains yet?
Investment strategy

Is it time to pick up growth stock bargains yet?

If you’re thinking of picking up some bargains from the tech stock crash, beware – there are still plenty of “growth traps” out there. John Stepek exp…
26 May 2022