By Millie Munshi Oct. 16 (Bloomberg) -- Platinum plunged almost 9 percent to the lowest since 2005 on speculation that the global economy will fall into recession and demand for the metal will decline. Palladium plummeted 12 percent, the most in two years. Industrial production fell 6 percent in the third quarter, the most since 1991, and a factory index for the Philadelphia region hit an 18-year low this month, Federal Reserve reports showed today. China's auto industry will likely consolidate as slowing demand and rising costs crimp margins. Platinum, used in car parts and jewelry, has dropped 42 percent this year. ``Platinum, for the most part, is an industrial metal, so slowing growth will hurt demand,'' said Patrick Chidley, an analyst at Barnard Jacobs Mellet in Stamford, Connecticut. ``Car sales will be weak with slowing growth, and platinum's moves will continue to have more to do with the economy.'' Platinum futures for January delivery tumbled $83.90, or 8.6 percent, to $891.30 an ounce on the New York Mercantile Exchange, the biggest decline since Sept. 16. Earlier, the price touched $852, the lowest since May 17, 2005. The metal is used in catalytic converters, which help to control pollution emitted by cars. The auto industry accounts for more than 60 percent of platinum demand. Palladium futures for December delivery dropped $22.50 to $173.10 an ounce. The percentage decline was the biggest since June 13, 2006. The price has slid 54 percent this year. To contact the reporter on this story: Millie Munshi in New York at mmunshi@bloomberg.net

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