• 4 minutes Europeans and Americans are beginning to see the results of depending on renewables.
  • 7 minutes Is China Rising or Falling? Has it Enraged the World and Lost its Way? How is their Economy Doing?
  • 13 minutes NordStream2
  • 2 mins Monday 9/13 - "High Natural Gas Prices Today Will Send U.S. Production Soaring Next Year" by Irina Slav
  • 20 hours California to ban gasoline for lawn mowers, chain saws, leaf blowers, off road equipment, etc.
  • 22 hours "Here is The Hidden $150 Trillion Agenda Behind The "Crusade" Against Climate Change" - Zero Hedge re: Bank of America REPORT
  • 59 mins GREEN NEW DEAL = BLIZZARD OF LIES
  • 4 days "A Very Predictable Global Energy Crisis" by Irina Slav --- MUST READ
  • 2 days U.S. : Employers Can Buy Retirement Security for $2.64 an Hour
  • 2 days Nord Stream - US/German consultations
  • 408 days Class Act: Bet You've Never Seen A President Do This.
  • 4 days An Indian Opinion on What is Going on in China
  • 4 days Can Technology Keep Coal Plants Alive and Well?
  • 1 day Forecasts for Natural Gas
  • 1 day Australia sues Neoen for lack of power from its Tesla battery
  • 4 days Storage of gas cylinders
  • 5 days Two Good and Plausible Ideas about Saving Water and Redirecting it to Where it is Needed.
Stuart Burns

Stuart Burns

Stuart is a writer for MetalMiner who operate the largest metals-related media site in the US according to third party ranking sites. With a preemptive…

More Info

Premium Content

Is Platinum’s Next Move Down?

Platinum is looking increasingly vulnerable. Net speculative length has been dropping for some weeks now and, as this graph from a Standard Bank report to investors shows, the trend has been generally down for much of this year. The net position is mostly due to an increase in short positions – those investors expecting a decline in prices – than a major exit of longs. This equates to a market with a weakening expectation of future prices.

Platinum Market
Source: Standard Bank

In lockstep with rising short positions is an ETF market that appears to have lost faith in the platinum market. As this graph from the bank shows, ETF holdings in platinum have been relatively flat all year after rising for the previous few:

ETF Platinum Holdings
Source: Standard Bank

Why should this be? In spite of eurozone worries, the main drivers of platinum demand – auto and chemical industry catalysts — have been relatively solid. In fact, for many other metals, such as aluminum and steel, the auto market is the one bright spot in terms of solid demand. Much of the growth in platinum demand, however, has been predicated on exceptionally strong Chinese automotive growth, a trend that has eased this year for a number of reasons. In addition to slowing auto sales growth, a report by Michelle Smith in Resource Investing News explores platinum auto catalysts demand and explains why simple auto sales numbers are not a good indicator of platinum demand.

The report states that according to the China Association of Automobile Manufacturers, auto production in China was nearly 12 million units by the end of August, a 3-percent increase on the year before. This is much below the level of domestic GDP growth in excess of 9 percent and reflects the withdrawal of 2009/2010 incentives such as the slashing of car tax on small vehicles and the double subsidy offered to farmers. These stimulus incentives boosted demand in 2009 by 46 percent and contributed to our perception that China is a small car market.

Here lies the first of our misconceptions: 12 million cars in China is not the same as 12 million cars in the US. US cars tend to be much larger saloons or SUVs requiring larger and sometimes dual catalytic converters, requiring significantly more platinum on a car-for-car basis. Devoid of incentives, the trend in China this year has been for mid-size and larger vehicles. Ford reported sales up 15 percent overall, but up 33 percent for its midsized Focus, whereas Mercedes reported “remarkable” sales growth in large part because of a demand surge in their largest S-class saloons, which were up 41 percent, and SUVs up 100 percent.
China’s commercial vehicle sales, however, are down nearly 5 percent through August and production down 7 percent, supporting the more widely accepted trend that industrial growth is slowing in China, but has yet to filter through to consumption.

With the US flirting with recession and at best facing weak consumer demand while the housing market remains depressed — and parts of Europe already in recession likely to depress growth among the stronger core states next year — auto growth is not going to be strong in Western markets. Unless China decides to loosen monetary policy and re-stimulate the economy, a move they could take if growth appears to slow too much, automotive sales are not looking to be the savior for platinum that they were in 2009-2010. Many observers, Standard Bank among them, see the next move as down.

By. Stuart Burns

(www.agmetalminer.com) MetalMiner is the largest metals-related media site in the US according to third party ranking sites. With a preemptive global perspective on the issues, trends, strategies, and trade policies that will impact how you source and/or trade metals and related metals services, MetalMiner provides unique insight, analysis, and tools for buyers, purchasing professionals, and everyone else for whom metals and their related markets matter.


Download The Free Oilprice App Today

Back to homepage





Leave a comment

Leave a comment




EXXON Mobil -0.35
Open57.81 Trading Vol.6.96M Previous Vol.241.7B
BUY 57.15
Sell 57.00
Oilprice - The No. 1 Source for Oil & Energy News