Palladium Futures Index (PALLADIUM)

[Pro-Life]

And run it did: Headline... Palladium outshines platinum



http://www.ibtimes.com/articles/20100917/palladium-outshines-platinum-global-auto-sector-china-european-market.htm

17 September 2010 @ 08:02 am EDT
Riding China's auto craze, palladium is putting on its biggest show of outperformance against platinum in over six years.

During teh past few months, CHina has been showign its clear dominance in the global auto sector that is only likely to strengthen now on.

The price of palladium, mainly used in auto catalysts to reduce vehicle emissions, has risen more than 35 percent this year to top $570 per ounce, driven in part by the proliferation of exchange-traded funds backed by physical metal that has sparked unprecedented demand for the platinum group metals.

Both platinum and palladium are used in vehicle catalysts in varying quantities. Catalysts in diesel engines tend to take a higher loading of platinum, while palladium is more abundant in catalysts for gasoline engines.

China, a largely gasoline vehicle market, now ranks as the world's largest and fastest-growing, and palladium simply mirrors that dominance over sister metal platinum, which depends more on the flagging European market for sustenance.

Now, China has become the engine for the world economy. Palladium's outperformance over platinum just reflects it.

All together, until the crash, the US consumer was the motor of the world economy. Now, it's the Chinese economy that has become the motor.

Less-stringent vehicle emissions legislation in China also favours sales of gasoline-powered cars, while Europe imposes ever-tighter controls on climate-warming emissions that results in more use of diesel vehicles.

Apart from that, auto sales have been declining year-on-year in Europe as a number of government incentives to boost consumer spending during the financial crisis expire.

Registrations of new cars in 27 member states of the European Union declined for the third consecutive month in June by 6.9 percent, with 1.341 million units registered, according to figures from the European Automobile Manufacturers' Association.

In the same month, total Chinese auto sales were up 48.2 percent at 1.04 million vehicles. Platinum has not only been eclipsed by palladium this year.

Gold, which hit record highs this week, has gained more than 15 per cent so far this year, while platinum is up almost 9 percent, trading around $1,598 an ounce.

Although more ETFs are widely expected to come to market in coming years, that explosion in demand for platinum is unlikely to repeat itself to the same extent.

Also, a concern for both metals is the robustness of the global auto sector, despite China's growing power in that industry, especially in an environment where investors and companies alike are cautious about the outlook for growth.


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