The future may not be platinum
High prices could dent demand
EVER WONDERED why platinum is nearly twice the price of gold? One reason is that platinum is the classic “famine metal” – with production confined to a few geographic locations and with more that 80% of known reserves found in just one country: South Africa.
The other reason is that literally every ounce of platinum produced each year is used by industry, particularly the autocatalyst industry, which snapped up more than 62% of the 7m ounces produced last year.
The majority of that goes to Europe, where strict vehicle engine emission legislation and the high level of diesel engine penetration (more than 50% of the mar- ket) keep demand for catalytic converters growing at a steady pace.
However, this tight balance between demand and supply could end up being platinum’s doom. Johnson Matthey expects demand for platinum jewellery to have fallen by 11% last year due to high prices, while JP Morgan says manufacturers of catalytic converters are increasingly substituting cheaper palladium for more expensive platinum.
Of course, the real danger is that some technological innovation could replace platinum altogether. After all, as someone once said: the Stone Age didn’t end due to a lack of stones.