Platinum and palladium futures fell in New York on concerns that demand for the metals used mostly in pollution-control devices in cars and trucks will decline as automobile sales plunge. General Motors Corp. and Chrysler LLC yesterday forecast an auto-industry slump this year. Detroit-based GM, the world’s largest carmaker, said sales will drop as low as 9.5 million vehicles from 13.2 million last year and an average of 16.1 million during the previous decade. In 2008, platinum tumbled 38 percent and palladium plunged 50 percent. “Uncertainty over the world’s auto industry may mean a decline in platinum price in the next few weeks,” Sergey Grudev, the head of the precious metals department at Standard Bank Russia in Moscow, said today in an e-mailed note. Platinum futures for April delivery fell $22.40, or 2 percent, to $1,076.50 an ounce on the New York Mercantile Exchange, the biggest decline for a most-active contract since Jan. 21. The metal is down 53 percent from a record $2,308.80 on March 4. Palladium futures for March delivery fell $2.50, or 1.1 percent, to $216.60 an ounce, the first decline since Feb. 9. The price has tumbled 57 percent in the past year. Platinum producers have cut output because supplies are expected to outpace demand this year, after an estimated deficit last year. Output Surplus World platinum demand may slip 4.6 percent to 6.8 million ounces in 2009, less than estimated supply of 6.96 million ounces, Derek Engelbrecht, a marketing executive at Impala Platinum Holdings Ltd., the world’s second-largest producer of the metal, told investors in Johannesburg today. Impala cut spending on new projects by a third and reduced the company’s output targets as the price fell. Johannesburg-based Impala will produce 2.1 million ounces of platinum in 2012, 8.7 percent less than previously planned, Chief Executive Officer David Brown said today in an interview. Fiscal 2009 production may drop 11 percent to 1.7 million ounces, while the company’s five-year investment plan announced last year will be cut to 20 billion rand ($2 billion), he said. Anglo Platinum Ltd., Impala’s larger rival, said last week it may extend output cuts. Before last year, production of platinum had fallen short of demand in eight of the previous nine years, according to London- based Johnson Matthey Plc. Supplies of palladium exceeded demand by more than 1 million ounces in 2007 for the fifth consecutive year, according to Johnson Matthey. Precious-Metals Demand Still, both metals have benefited this year from increased demand for precious metals as an alternative to other assets, including stocks. Gold is up 10 percent in 2009, compared with a 14 percent increase for platinum and a 15 percent rally in palladium. “As the next wave of the banking crises begins to unfold, platinum and palladium both stand to gain from safe-haven buying,” Ralph Preston, a commodity analyst with Heritage West Futures Inc. in San Diego, said in an e-mail. The number of Americans collecting unemployment benefits surged to 4.99 million two weeks ago, the Labor Department said today in Washington. The Philadelphia Federal Reserve Bank said manufacturing in its region shrank the most since 1990. In Russia, the world’s biggest palladium producer, the RTS exchange plans to start trading platinum and palladium futures at the end of March, Sergei Danov, head of commodity derivatives business development, said by telephone today. He declined to give a specific date. The start of trading in the contracts, denominated in dollars and settled in rubles, has been delayed. The exchange said in October it planned to begin Feb. 1. The RTS already trades gold and silver contracts.

Source