By Halia Pavliva Dec. 9 (Bloomberg) -- Platinum fell on speculation that global demand will weaken as Japan’s economy and U.K. industry shrank faster than forecast. Palladium rose. Japan’s gross domestic product declined at an annual 1.8 percent pace in the third quarter, the Cabinet Office said today in Tokyo, more than the 0.4 percent rate estimated last month. U.K. factory output fell 1.4 percent in October from September, the government said today in London. Most platinum is used in auto parts. The metal fell 45 percent this year before today. “Poor economic data adds to the pressure on the platinum group metals,” Sergey Grudev, the head of the precious metals department at Standard Bank Russia in Moscow, said in an e- mailed note. “The pressure may strengthen because of the continuing decline in Japan gross domestic product and amid expectations for pessimistic sentiment in Germany and the U.S.” Platinum futures for January delivery fell $28.40, or 3.4 percent, to $814.90 at 9:53 a.m. in New York Mercantile Exchange trading. The price dropped 11 percent last week, the fifth weekly decline of more than 10 percent since Aug. 1. Palladium futures for March delivery rose $2.50, or 1.4 percent, to $177.70 an ounce in New York. The price dropped 54 percent this year before today. The metal touched $160.30 on Dec. 5, the lowest for a most-active contract since July 2003. Japan’s first recession since 2001 is deepening as companies including Sony Corp., Canon Inc. and Toyota Motor Corp. cut production, employment and spending. Sony cut 16,000 jobs today, half of them permanent positions. A Bank of Tokyo survey next week probably will show manufacturers harbor the glummest outlook in 34 years, economists predict. Japan’s Worsening Outlook “The biggest downward move comes out of Japan, where their recession looks to be much worse than originally expected,” Miguel Perez-Santalla, a sales vice president at Heraeus Precious Metals Management in New York, said today in a report. While palladium gained, he said it wasn’t a very strong move. Anglo Platinum Ltd., the world’ biggest platinum producer, will report on a capital-investment review on Dec. 17. “It’s expected that the company will significantly cut its capital spending,” Standard Bank’s Grudev said. “However, the market will most likely ignore any production news.” The slump in demand will probably push platinum to its biggest surplus in 10 years, Paul Walker, chief executive officer of London-based research company GFMS Ltd., said in September. Before today, platinum tumbled 63 percent from a record $2,308.80 an ounce in March as U.S. auto sales plunged to the worst annual rate in 26 years last month. Automakers account for more than 60 percent of global platinum consumption, according to estimates by Johnson Matthey Plc, a London-based metals refiner, trader and researcher. Palladium is also used to make catalytic converters for car and truck exhaust systems. Jewelry makers also use both metals. To contact the reporter on this story: Halia Pavliva in New York at hpavliva@bloomberg.net.

Source