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Platinum - Commodities Info

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Platinum is the rarest of all precious metals. It has several unique chemical and physical properties that make it essential in a wide range of industrial and environmental applications. Platinum is also considered as one of the finest of all jewellery metals.

Major Characteristics

  • Platinum as a pure metal is silvery-white in appearance, lustrous, ductile, and malleable. It is widely used in several industrial applications as it possesses high resistance to chemical attack, excellent high-temperature characteristics, and stable electrical properties.
  • Platinum is corrosion resistant and is more precious than gold. Platinum's wear- and tarnish-resistance characteristics are well suited for making fine jewelry.
  • 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 and 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 South Africa (76%) and Russia. The other producers are United States of America, Canada and Zimbabwe.
  • The production of platinum is highly dependent on South Africa's production with 2009 output from South Africa, Russia, USA and Zimbabwe estimated to be 4.7 million ouces, 0.74, 0.25 and 0.33 million ounces respectively.
  • The platinum mining industry is very capital intensive and it is reported that approximately 10 tonnes of raw ore has to be mined to produce just one pure ounce of platinum.
  • Unlike other precious metals like gold and silver, there are no large above-ground platinum stockpiles to protect against significant supply disruptions. Some estimates predict that existing above ground reserves would last only for a year, if platinum mining was suddenly stopped.
  • The demand for platinum mainly comes from auto catalyst, jewellery, other industrial application and investment. The other industries uses platinum are electronics, glass and petroleum industry.
  • The total global demand 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 and other industrial applications estimated to be around 3.8, 1.6, 0.45 and 1.9 million ounces respectively.
  • North America, Europe, China and Japan are the most important economies accounting for majority of the global platinum consumption.

World Gold Markets

  • The London Platinum and Palladium Market (LPPM), which provides the industry benchmark price ‘London fix’
  • Derivative exchanges at New York – 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 leading to rising industrial demand and increasing preference for platinum jewellery in urban areas.
  • India's consumption of platinum in 2008-09 is estimated to be around 932 kgs, which is expected to rise to around 1200 kgs in 2009-10.
  • The approximate consumption by various sectors in India is estimated to be automobile (55%), petrochemicals (25%), jewellery (15%) and 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 and have to be closely followed.
  • The global prices are driven by a host of factors with macro-economic factors like strength of the global economy, currency movements, interest rates, rising importance of emerging markets being major influencing factors.
  • Economic situation in major consuming countries like USA, Europe, Japan and China influence consumption on account to its high demand from industrial sectors, especially automobiles.
  • Platinum production is highly skewed with just four mines and two countries producing almost 90% of the total annual production. Prices are influenced profoundly by production disruptions, policies taken in producing countries. The influence of this factor is enhanced by the absence of any significant global stocks of platinum in the world, unlike that of gold and silver. Additionally, platinum mining is a very capital intensive industry, which discourages entry of new players.
  • Any change in global stocks, of which a major portion is present in Russia do influence prices.
  • The price movement in other precious metals, especially gold is a major influencing factor.

Measurements - Weight Conversion Table

To Convert FromToMultiply By
Troy ounceGrams31.1035
Troy ounceKilograms0.0311035
Million Troy Ounce Tonnes31.1035
KilogramsTroy Ounce32.1507
TonnesTroy Ounce32150.7

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