Platinum futures have slumped to around $840 an ounce, a near-ten-year low. The metal is used largely for catalytic converters in diesel engines. The diesel emissions scandal at VW, in addition to the potential damage to car makers from a trade war, has raised fears of a sharp fall in demand.
But the gloom looks overdone, says Myra P Saefong on MarketWatch. Platinum now costs less than gold, despite being rarer; it is also generally pricier than palladium, but last September was trading lower for the first time since 2001.
Wealthier emerging-market consumers and stricter pollution controls should continue to stoke demand for cars and converters, while diesel engines are more fuel-efficient than petrol ones.
“It is well known that productivity, measured by output per hour, is about a fifth below where it should be on the basis of past trends, and that productivity is about a third higher in Germany, France and the US. Less well known is the size of the productivity gap within Britain. The productivity gap between the top and bottom 10% of performers in Britain is 80% larger than in competitor countries and, as importantly, that gap between the best and the worst has increased by two to three times since the crisis. As [Andrew Haldane, the Bank of England’s chief economist, puts] it: ‘A long… tail of stationary companies explains why the UK has a one-third productivity gap with its international competitors. And that same tail is also an important reason why the UK has a one-fifth productivity gap relative to the past.’ The long tail is wagging the low productivity dog.”
David Smith, The Times