Platinum Scenario

Platinum:

Major Characteristics:

  • Platinum is the rarest of all precious metals. It has several unique chemical & physical properties that make it essential in a wide range of Industrial & Environmental applications. Platinum is also considered as one of the finest of all Jewellery metals.
  • Platinum as a pure metal is silvery-white in appearance, lustrous, ductile, & malleable. It is widely used in several industrial applications as its possesses high resistance to chemical attack; excellent high-temperature characteristics,& stable electrical properties.
  • Platinum is traded as a commodity with prices determined by market forces; it is also a widely sought after investment avenue in recent years. However, it is not widely treated as a monetary base like gold.

Global Supply & Demand Scenario:

  • The supply of platinum is met by mine production, auto catalyst refining and jewellery refining with their respective contribution estimated to be 6.15 million ounces, 1 million ounce, & 0.9 million ounce in 2008.
  • The annual production of platinum has averaged around 6.2 million ounces (193 tonnes) in the previous three years from 2006 with more than 90% of the production coming from S.A (76%) & Russia. The other producers are U.S.A; Canada; & Zimbabwe.
  • The production of platinum is highly dependent on S.A’s Production to be 4.7million ounces; 0.74, 0.25, 0.33 million ounces respectively.
  • The total global for this rare metal is reported to be around 7.79 million ounces in 2008, with consumption by auto catalyst (used in automobiles), jewellery, investment & other industrial applications estimated to be around 3.8, 1.6, 0.45, & 1.9 million ounces respectively.
  • North America, Europe, China & Japan are the most important economies accounting for majority of global platinum consumption.

World Global Markets:

  • The London Platinum & Palladium market (LPPM) which provides the industry benchmark price ‘London Fix’.
  • Derivative exchange at Newyork- CME (Comex) TOCOM (Japan), MCX (Mumbai).

Indian Platinum Market:

  • India’s appetite for platinum has been steadily increasing in recent years on account of the country’s economic progress heading to rising industrial, demand & increasing preference for platinum jewllery in urban areas.
  • India’s consumption of platinum in 2008-09 is estimated to be around 932kgs, which is expected to rise around 1200kgs in 2009-10.
  • The approximate consumption by various sectors in India is estimated to be automobile (55%), petrochemicals (25%), Jewellery (15%) & electronics & dental (5%).

Market Moving Factors:

  • Indian platinum prices are highly correlated with International prices. However, the fluctuations in the INR-US Dollar impact domestic platinum prices & have to be closely followed.
  • Economic events, global financial crisis, recession, & inflation affect metal prices.
  • Commodity Specific events such as the construction of new production facility or processes, unexpected mine or plant closures; or industry restructuring, all affect metal prices.
  • Government set trade policy (implementation or suspension of taxes, penalties, & Quotas) that affect supply by regulating (restricting or encouraging) material flow.
  • Geopolitical events involving governments or economic paradigms & armed conflict can cause major changes.