By Millie Munshi Oct. 27 (Bloomberg) -- Platinum dropped to a five-year low in New York on concern that a slowing global economy may reduce demand for the metal from automakers. Palladium rose. The U.S. auto market may shrink this year to the smallest since 1993 as the credit crunch and a slowing economy curb sales. Carmakers use platinum in pollution-control parts and account for more than 60 percent of demand. The metal's price has plunged 48 percent this year. ``The auto industry is in a decline right now,'' said Tetsuya Yoshii, vice president for derivative products at Mizuho Corporate Bank Ltd. in Tokyo. ``That will be a very bearish factor for platinum and palladium.'' Platinum futures for January delivery dropped $5.10, or 0.6 percent, to $797.20 an ounce on the New York Mercantile Exchange. Earlier, the price touched $752.10, the lowest for a most-active contract since Nov. 18, 2003. Price declines may prompt miners to cut back production, said Daniel Sacks, a fund manger at Investec Asset Management. ``The last week has seen some commodities fall below marginal cost of production -- the level which should induce supply cutbacks,'' Sacks said by phone from Cape Town, South Africa. ``We view metals like platinum as attractive territory.'' Sacks said the marginal cost of production for platinum is about $1,100 an ounce. South Africa is the largest producer of the metal. Palladium futures for December delivery rose $1.45, or 0.8 percent, to $175.40 an ounce in New York. The metal is still down 54 percent this year. To contact the reporter on this story: Millie Munshi in New York at mmunshi@bloomberg.net.

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