Platinum, Palladium and Rhodium Price Forecasts 2010

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Precious Metals, Supply & Demand

Listen in to MetalMiner’s Lisa Reisman who explains why the historical variables examined to price forecast platinum, palladium and to some extent rhodium are no longer valid today.

Buyers of platinum, palladium and rhodium have a particularly complicated job of tracking and projecting price movements due to the diverse range of variables that impact the cost of each of these metals, particularly for platinum and palladium. With South Africa home to 78% of the world’s supply of platinum and 86% of the world’s supply of rhodium (it “only controls 35% of the world’s supply of palladium), issue such as mine safety for example can have an enormous impact on the market. The Wall Street Journal recently reported the production declines of South Africa’s largest mining firms from suspended operations due to safety concerns. According to the article, AngloGold Ashanti Ltd had a 14% production decline from 2008 to 2007 and Lonmin PLC, had a production decline of 5% in 2009. In addition, Impala Platinum Holdings, the world’s second largest producer of platinum according to the WSJ article lost 83,000 of platinum production due to a rock fall that killed nine workers.

The following chart shows the mine safety trends for the South African mining firms:

And though 2009 appears on par with 2008 levels, miners have concerns that the rules for work stoppages appear vague and unclear and have urged the government to generate new more explicit guidelines governing work stoppages. But safety concerns represent only one of about eight variables that impact precious metal pricing on the “supply side. Our Platinum, Palladium and Rhodium Price Predictions 2010 report provides an in-depth look at the 15 or so variables that we believe impact platinum, palladium and rhodium prices.

Meanwhile, prices for platinum and palladium have increased since the beginning of the year though the 30-day charts look a bit different between the two metals:

Much of the rise in platinum prices this year however, does not relate to mine safety issues in particular but rather total gross dollar inflows into ETF’s and specifically, dollar inflows into the newest fund set up in New York. The funds only hold 1392 tons of platinum or less than eight weeks of global demand, according to Mineweb but the dollar flows of $400m into all funds and $250m into the newest NY fund have driven up prices.

Buying organizations wishing to better understand all of the factors impacting the future price of these metals can find more information here in our price forecasts section of the site.

–Lisa Reisman

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