Impala says earthquake will have limited effect of platinum and palladium markets.
THE biggest earthquake on record in Japan and the following tsunami will have a limited effect on the platinum and palladium markets. Car manufacturers in that country have also declined any relief offered by Impala Platinum, the company’s marketing executive, Derek Engelbrecht, said yesterday .
Platinum and palladium prices fell between 10% and 15% after the 8.9-magnitude earthquake and tsunami on March 11 over concerns about offtake for the metal. The metals are predominantly used to make autocatalysts in exhaust systems to scrub out noxious gases.
Large Japanese car makers have suspended production for two weeks and some, such as Toyota, have said they will restart operations this weekend, having checked the status of component makers in Japan, Bloomberg reported. A large constraint on production is electricity supply.
"A two-week disruption will not create a lot of waves for platinum group metals (PGM) producers," Mr Engelbrecht said.
"The Chinese were very aggressive buyers of platinum when the price came off after the quake. The Chinese have picked up any slack on platinum," Mr Engelbrecht said, adding a sell-off in platinum futures and news from Japan offset any positive effect that this buying may have had for the metal’s price.
Implats , the world’s second- largest producer of platinum, has offered relief to its customers in Japan, which account for about a third of its annual metal sales, Mr Engelbrecht said.
"We said if they want to delay deliveries or anything like that we would accede to that, but none of them took us up on the offer."
Japanese car makers tend to run very lean inventories of PGMs and holding an extra two weeks of stock "is neither here nor there for them in the bigger scheme of things", he said.
An Implats office in Japan was keeping close tabs on customers’ requirements and plans.
PGM refiner Johnson Matthey estimated that Japan accounted for 15% of global platinum demand, or 1,2-million ounces last year, and 16% of palladium offtake, or 1,5-million ounces.
"The cause of the recent fall in PGM prices is mostly attributable to the devastating earthquake in Japan," RBC Capital Markets analyst Leon Esterhuizen said in a recent note.
Japan accounted for 10% of the world’s car production last year, making nearly 7,7-million vehicles, 94% of which used petrol engines.
Japan once dominated the platinum jewellery market, but it has since been surpassed by China, which accounts for about two-thirds of world platinum jewellery demand. Japan now makes up a fifth of world demand.
"From a global platinum perspective, there will be some impact but I don’t think it’s going to be a massive impact," Mr Engelbrecht said.
Japan is a bigger consumer of palladium than platinum because the autocatalysts it makes are predominantly for petrol-fuelled cars. Platinum is used in diesel catalysts. Japan uses palladium in electronic and dental applications.
