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Global commodities expert says platinum market could be changing

May 15, 2014

A global commodities expert says palladium prices look set to rise over the next two years, and platinum could start behaving more like gold and less like an industrial metal due to Chinese jewellery demand. Leon Westgate from Standard Bank, London was speaking at a recent seminar organised by online precious metals trader, GoldMoney.

Martyn White, Head of European Business Development, GoldMoney hosted the event which was aimed at giving potential investors and their intermediaries insight into what is driving the markets.

Supply is very regional, said Leon Westgate, "Russia dominates global palladium supplies and the Ukraine situation is causing some concern there. Meanwhile, South Africa dominates platinum mining and with the mine strikes we have already lost around seven per cent of the global annual output. The interesting fact is that prices have not moved much despite these supply concerns and that tallies with our conclusions that there was more above ground stocks than had been estimated. However we expect both markets to remain tight and in particular palladium prices could rise in the next two years."

Guests heard how the two metals are traded differently to gold as they are seen as semi-industrial. "Palladium in particular is used in the auto-catalyst industry which uses around 65 per cent of stocks and jewellery demand is still relatively small. Platinum however, although also used in industry, has a larger percentage going to jewellery, around 30 per cent. We expect the demand from China for platinum in jewellery to increase and this will mean the platinum market will start behaving more like gold."

In answer to a question from the audience with regard to a precious metals portfolio, Leon Westgate said: "Including some silver, platinum and palladium is a way of getting industrial exposure without having to get your hands dirty with industrial metals."

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Source: CPI Financial

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