MetalMiner’s Global Precious MMI took a bit of a dip this month, coming down 1.1% to 83.
The sub-index’s value held at 84 in June and May, but on balance, the price drops within the overall basket of metals couldn’t hold the ship steady into this post-Independence Day summer lull.
While our U.S. platinum bar price got very close to its 2017 start-of-the-month low (which it hit in January; more on platinum below), U.S. palladium rose 3.8% month-on-month to record its highest price in 34 months — nearly a 3-year high.
Diesel goin’ down? Due to negative sentiment after Dieselgate, as MetalMiner’s Editor at Large Stuart Burns pointed out recently, sales of diesel vehicles in some parts of Europe have taken a dive in the past few months over concerns that “authorities will raise costs or otherwise make living with diesel engines a less attractive proposition for owners.” Overall, total car sales have dropped in some European markets, including the U.K. — but in the spots where they haven’t, gas-powered vehicles have been winning over diesel. In short, not awesome for platinum prices.
BEVs are not the panacea. Battery electric vehicles (BEVs) could be the ticket … except that the World Platinum Investment Council forecasts BEVs to make up no more than 5% of the market by 2025, so that wouldn’t work either.
Of course, investor demand, jewelry demand and other industrial sectors, such as chemical, all play into it. But “platinum’s fortunes will in part ride on the coattails of the auto industry’s ability to re-establish the diesel engine as an environmentally acceptable propulsion unit,” according to Burns.
Meanwhile, as my colleague Fouad Egbaria reported yesterday, gold is now trading on the LME.
What Metal Buyers Should Look Out For
The divergence between platinum and palladium prices of late certainly merits attention, and perhaps may drive industrial manufacturers to broader substitution efforts — but that could be a stretch. According to analysts cited by the Financial Times (paywall), “the divergence reflects a number of factors, including speculative demand and several years of production deficits that have eroded stockpiles and reduced available supplies.” The article goes on to say that longer term, “with the increasing popularity of electric vehicles, analysts say this year’s turbocharged run for palladium could be a last hurrah for the material, which has few industrial uses outside of the car industry.”
Last month, we wrote that “while we’re unsure of when prices will swing back up, mainly because output cuts in South Africa and elsewhere have seemingly not helped, it may be hard to discount current windows for smaller spot buys.” Fortunately for platinum spot-buyers, this still holds true.
Key Price Movers and Shakers
S. palladium bar’s new high takes the headlines, rising 3.8% to $847 per ounce.
Our U.S. gold price fell back to pre-May levels, ending up at $1,245 per ounce. (China’s gold bullion price also dropped back to its May level almost exactly, clocking in at $40.33 per gram.)
Silver prices in the U.S., China, Japan and India fell across the board for July.