By Courtney Weaver
MOSCOW — The U.S. and European automobile industries are screeching to a halt, and they’re leaving behind a string of casualties — not all of which are obvious.
Prices for platinum, which 18th-century French monarch Louis XV is said to have called the only metal fit for a king, have fallen 66 percent from their high in March of $2,276 per ounce to as low as $769 last week. And while coronations have fallen off sharply in recent centuries, weakening demand from carmakers is the culprit behind platinum’s plummet.
Still popular among jewelers, platinum’s primary use now is as a catalyst in auto exhaust systems, and Russia — the world’s second-largest producer of the metal behind South Africa — shouldn’t expect to see any recovery, at least not in the short term.
“The fear is that due to an economic slowdown, platinum demand may slow down next year, which could keep prices at a relatively distressed level,” said Mikhail Stiskin, a metals analyst at Troika Dialog.
There’s hope that platinum prices could return to earlier levels eventually, he said, but a short-term stabilization around current levels is likely.
On Friday evening, platinum for immediate delivery was trading at $820 on the London Metals Exchange — a fall of 2.3 percent on the week. Nonetheless, it was an improvement from Thursday, when the weekly decline was at more than 7 percent.
And with carmakers accounting for 60 percent of global consumption, according to metals and chemicals company Johnson Matthey, the rebound may still be a long time coming.
Last week, the heads of General Motors, Ford Motor and Chrysler personally traveled to Washington to ask Congress for a $25 billion bailout to help them stay afloat. The three companies’ U.S. sales have fallen 21 percent this year, and GM and Ford have lost a combined $30 billion.
But the CEOs got an angry reaction from some lawmakers after Senator Harry Reid noted that all three arrived on corporate jets, and a decision was put off until the companies provide a more detailed plan of how they would use the money.
On a brighter note, China’s auto industry is still expected to expand next year, and new environmental regulations in Europe will give platinum an edge in the production of filters that reduce diesel particulate emissions.
In terms of output, Russia lags behind South Africa, a country responsible for 76 percent of global platinum production. Norilsk Nickel is Russia’s largest producer of the metal.
