Platinum Heads for Second Weekly Decline as Auto Demand Slumps
By Glenys Sim
April 24 (Bloomberg) -- Platinum headed for a second weekly decline as slumping auto industry demand cut consumption of the metal used mainly to make catalytic converters for vehicles.
General Motors Corp., operating with $13.4 billion of federal loans, said in a statement yesterday it will idle 13 U.S. assembly plants for multiple weeks to trim inventory after sales in its home market fell 49 percent this year through March. Platinum supplies will exceed demand for a second year in 2009, London-based research company GFMS Ltd. said yesterday. The metal has gained 27 percent so far this year.
“The fundamentals remain weak in the near term, given the sharp slowdown in vehicle sales,” Barclays Capital analysts led by Gayle Berry said in an e-mailed report today. “In line with our expectations for a recovery in growth in the second half of 2009, the platinum group metals should find more sustained support as production is scaled back in light of low prices.”
Platinum for immediate delivery dropped as much as 0.6 percent to $1,176.50 an ounce and traded little changed at $1,184 at 9:57 a.m. in Singapore. The metal is down 2.2 percent this week. Palladium was unchanged at $233 an ounce.
The platinum surplus was 162,000 ounces last year after a deficit of 109,000 ounces in 2007, GFMS said. It may stay the same this year if jewelry recovers, GFMS analyst Peter Ryan said. Platinum will trade between $900 and $1,375 an ounce this year, GFMS said. Platinum for February 2010 delivery on the Tokyo Commodity Exchange was little changed at 3,723 yen a gram ($1,186 an ounce).
Auto Woes
GM’s plan is to reduce production by 190,000 vehicles from May through July, the company said. The largest U.S. automaker also will pare output at an unspecified number of stamping, engine and transmission factories, North America President Troy Clarke said in a conference call.
Toyota Motor Corp., the world’s biggest carmaker, posted its third straight quarterly drop in sales after demand plunged in the U.S., Europe and Japan. Honda Motor Co., Japan’s second- largest carmaker, cut production for a fifth month in March as sales tumbled.
The global recession has forced Toyota and other Japanese automakers to cut jobs and production, while Detroit automakers General Motors and Chrysler LLC have turned to the U.S. government for aid to survive.
To contact the reporter on this story: Glenys Sim in Singapore at gsim4@bloomberg.net
Last Updated: April 23, 2009 22:06 EDT
