platinum price

US auto sales remain the bright spot in the drivers of the monthly Automotive MMI®.

The Real Steel Story

Seasonally adjusted annual rate of sales for light vehicles rose to 17.8 million compared with 17.3 million a year earlier and was the highest since July 2005, according to researcher Autodata Corp. August was the fourth consecutive month that adjusted sales remained above the 17 million mark.

Automotive August-2015The Automotive MMI® still registered only a value of 73 in September, a decrease of 3.9% from 76 in August. Weak prices for most of the base metals that make up the index (HDG, copper, aluminum and lead) abound despite strong end user sales in the US. In China, auto sales are falling with the rest of the domestic economy there.

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As the base metal and ferrous metal complexes we cover continue to take a bruising, the peripheral hits have struck our precious metals price index as well, with PGMs platinum and palladium leading the charge downward.

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In fact, the monthly Global Precious Metals MMI® registered a value of 74 in August, a decrease of 7.5% from 80 in July – thereby hitting a new all-time low. Every single metal price point for gold, silver, platinum and palladium dropped across all geographies we track, including the US, China, India and Japan.

precious metals price chart august 2015

This index has never seen the 70s before, and it’s not having a really nice day as they used to say in the ’70s (at least not for investors).

RELATED: 3 Best Practices for Buying Commodities

Precious Metal in Focus: Palladium

According to my colleague Raul de Frutos, writing at the end of July, palladium prices fell as much as 14% during that month:

Palladium price since 2013

Palladium price since 2013. Graph: MetalMiner.

Ironically, palladium was the best performer among precious metals until just about a year ago when it started to fall, Raul wrote. So far, year-to-date, palladium has tanked 32% with the most precipitous drop showing over the past two months. So what’s been driving the price meltdown?

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Due to its role in gas-powered car engines, palladium is more exposed to the Chinese and US automotive markets than to European markets. The slowdown of the Chinese automotive market over the past few months may be Public Enemy No. 1 as far as a driver of palladium’s price decline.

Free Download: Compare With the July MMI Report

Just a couple days ago, BMW and Toyota Motor Corp. publicly voiced their concerns over China’s car market, saying that the days of double-digit growth are likely over, as reported by Bloomberg. Both companies are concerned about their profits getting dinged, and are therefore cutting back production based on low demand numbers – BMW, for example, said earlier this week that it had cut production in China by 16,000 cars so far this year.

And Platinum?

South African mines, producers of 70% of the world’s supply, have been reporting production levels for platinum above those during the 5-month strike in 2014, as Raul has pointed out in his previous coverage. Combined with the lollygagging of the Chinese auto sector, looks as though platinum prices may not see a huge rebound for some time as well.

Wild Card

Remember, the strength of the US dollar plays a big role in the movement of this index. The dollar-to-euro exchange rate has been listed as the No. 1 driver of all the base metals in our latest, newly revamped monthly buying outlook, and it’s safe to say that’s no exception for gold and silver movement – when the dollar is strong, investors tend to leave gold behind as a safe haven a little more often.

Exact Precious Metals Prices and Trends

The price of US palladium bar fell 9.5% to $609.00 per ounce. At $34.26 per gram, Chinese platinum bar was down 9.0% for the month. The price of US platinum bar closed the month at $982.00 per ounce after dropping 8.8%.

* Get the complete prices every day on the MetalMiner IndX℠

Indian silver prices fell 8.4% to $541.82 per kilogram. Japanese platinum bar prices dropped by 8.1% this month to $31.59 per gram. A 7.1% decline for Japanese palladium bar left the price at JPY 2,470 ($19.91) per gram.

A 6.6% drop over the past month left US gold bullion at $1,095 per ounce. After falling 6.4%, Chinese gold bullion finished the month at $35.31 per gram. Following a 6.0% decline in price, Chinese palladium bar finished the month at $22.84 per gram.

Chinese silver prices dropped by 5.9% this month to $515.48 per kilogram. After falling 5.9%, Indian gold bullion finished the month at $393.44 per 10 grams. A 5.7% decline for Japanese gold bullion left the price at JPY 4,365 ($35.19) per gram. At $14.79 per ounce, US silver was down 5.6% for the month.

Following a 3.9% decline in price, Japanese silver finished the month at $4.76 per 10 grams.

The Global Precious Metals MMI® collects and weights 14 global precious metal price points to provide a unique view into precious metal price trends over a 30-day period. For more information on the Global Precious Metals MMI®, how it’s calculated or how your company can use the index, please drop us a note at: info (at) agmetalminer (dot) com.

There was no joy in automotive metals this month as prices retreated again amid ample supply and not enough worldwide demand.

Automotive_Chart_August-2015_FNL

The monthly Automotive MMI® registered a value of 76 in August, a decrease of 7.3% from 82 in July, another all-time low for the index. Before the last two months, its previous low was 85.

Steel Prices Falling

Base metals remain in a bearish market, one that’s starting to edge on historic proportions. Also, a glut of imported steel in the US market continues to drive down prices domestically while the lack of demand overseas only exacerbates the problem here.

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US steelmakers have been forced to rely on anti-dumping actions again in hopes of creating some semblance of market equilibrium.

Steel is not the only ingredient in the Automotive MMI and its fall has been helped along liberally by steep falls for aluminum, palladium, platinum and copper.

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It’s safe to say that the Greece and China crises that have hit the global economy are going to be the biggest issues to watch as far as the precious metals markets – and prices – are concerned.

Over the past month, the monthly Global Precious Metals MMI® fell 4.8% from 84 in June, and it may have further to fall before July is out.

Global-Precious-Metals_Chart_July-2015_FNL

* Read what we said in last month’s analysis.

China’s Star is Falling

One may think that the Chinese equity market crash may help investors flock to gold as a safe haven – but not so fast.

A leading precious metals consultancy called Metals Focus, which interestingly, according to this article, has booted GFMS as the primary supplier of statistical data to the World Gold Council, points out that due to China being a gambling culture, “reckons there is more the likelihood that weak equity prices may end up adversely affecting physical gold demand. Losses generated by the impact of the stock market crash may well hit jewellery and gold artefact purchases, while the scale of the fall is such that potential investors nursing big losses may well not have the liquidity to move back into gold.”

Which would likely mean that gold prices won’t see a whole lot of support. As my colleague Raul de Frutos has noted around the office water-cooler recently, “gold’s safe haven thesis” is not really playing out, probably because of a strong dollar.

Saturday Night at the Palladium: Also Down

The palladium prices from all three global markets we track on our IndX (the US, China and Japan) fell by double digits over the past month. Platinum prices also haven’t looked so hot, looking at 6-year lows, mainly driven by weakness across other commodities and industrial metals.

Palladium spot price since 2012

Palladium spot price since 2012. Source: MetalMiner.

So what to watch in palladium and PGM markets in general?

  • Keep an eye on that US dollar – a strong dollar means a weak South African rand, and that means good news for SA producers to boost supply
  • Investment activity – ETF and other inflow/outflows
  • Next China PMI -> What that means for China automotive demand -> What that means for China auto production

Actual Gold, Silver, Platinum, Palladium Prices

After rising the previous month, Japanese palladium bar prices dropped 13.6% to $21.73 per gram. The price of US palladium bar fell 12.8% to $673.00 per ounce. At $24.32 per gram, Chinese palladium bar was down 12.2% for the month.

Japanese silver prices fell 7.3% to $5.02 per 10 grams after rising the previous month. After rising the previous month, US silver prices dropped 6.2% to $15.66 per ounce. After falling 4.8%, Chinese silver finished the month at $548.32 per kilogram.

Japanese platinum bar prices fell 4.0% to $34.85 per gram after rising the previous month. After rising the previous month, Indian silver prices dropped 2.5% to $594.89 per kilogram. Japanese gold bullion prices fell 2.5% to $37.83 per gram after rising the previous month. At $1,077 per ounce, US platinum bar was down 2.2% for the month.

After rising the previous month, Indian gold bullion prices dropped 1.8% to $420.36 per 10 grams. Last month, Chinese platinum bar prices dropped by 1.7% to $37.68 per gram. The value of US gold bullion weakened by 1.4% this month, settling at $1,173 per ounce. The price of Chinese gold bullion drifted 1.0% lower to $37.78 per gram.

The Global Precious Metals MMI® collects and weights 14 global precious metal price points to provide a unique view into precious metal price trends over a 30-day period. For more information on the Global Precious Metals MMI®, how it’s calculated or how your company can use the index, please drop us a note at: info (at) agmetalminer (dot) com.

Through half of 2015, US auto sales are on track to hit record levels not seen in 15 years. After climbing more than 4% through July, annual sales could approach the previous annual record of 17.4 million if they stay on this pace.

Yet, none of that demand seems to be helping automotive metal prices.

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As robust as the US automotive market is, it can’t entirely make up for sluggish sales elsewhere that are depressing demand for metals such as steel, aluminum and copper and pushing our index further down. Even the exhaust system metals, platinum and palladium, saw a deep dive this month.

Chinese New Car Sales Barely Growing

New car sales grew just 1.2% in China this May. Further complicating matters is the fact that the nation of 1.37 billion is starting to develop a used car market and it’s looking very much like Chinese consumers like paying less for a used car, rather than paying more for a new one. What a shock?

This is, of course, bad news for raw materials suppliers as the massive Chinese auto market only recently transitioned to automobiles being the main form of transportation. Less-metals-intensive bicycles and motorbikes had filled that role until recently.

Chinese steel and aluminum manufacturers had been counting on more robust growth from the domestic new car market and a strong used market could stunt the advances many were planning to reap from new car sales.

Bearish Market Hits Home

The monthly Automotive MMI® registered a value of 82 in July, a decrease of 3.5% from 85 in June.

Automotive_Chart_July-2015_FNL

As we have documented liberally, the strong US dollar has created a bearish environment for all metals and automotive inputs are no exception. The steep fall observed this month in palladium, a metal that had previously held our automotive index up, was an example of just how much the bearish market is affecting even metals with strong demand. Palladium hit a two-year low this month and the bottom, subsequently, fell out of an already listing price index.

Copper, zinc and lead also fell significantly.

What This Means for Automotive Metal Buyers

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Silver prices in Japan, India and the US all rose over the past month, as did gold prices in the same regions. Silver and gold prices in China, however, fell ever so slightly. These inputs, as well as platinum and palladium prices showing mixed movement, resulted in MetalMiner’s monthly Global Precious Metals MMI® registering a value of 84 in June, holding steady at May’s level.

precious metal price index chart

Compare with last month’s report: download it free here.

The real stories that concern us, however, may reside in the PGM markets.

2015 GFMS Platinum & Palladium Survey SAYS:

Thomson Reuters recently released its GFMS Platinum & Palladium Survey 2015, and in it, noted that the platinum market to be in a deep deficit last year “(prior to inventory movements) of 1.02 million ounces, singularly owing to major strike-related production stoppages in South Africa.” The 2014 deficit comes on the heels of surplus in 7 of the last 8 years; the deficit is expected to continue.

Meanwhile, palladium has been a market in deficit since 2007. The GFMS team estimates “the palladium market deficit last year at 1.58 million ounces, representing the most severe market imbalance for more than a decade.”

GFMS Platinum, Palladium Price Forecast

According to the survey, the average platinum price is forecast to fall by 16% year-on-year, averaging $1,170/oz, about 5% higher than May’s closing price on the MetalMiner IndX. Analysts indicate that this suggests a closing of platinum’s discount to gold. The average palladium price forecast is broadly flat year-on-year at $800/oz, not too much higher than current prices.

William Tankard, research director of mining at Thomson Reuters, is quoted as saying, “It appears to us that forward buying programs by the automotive sector are developing increasing levels of flexibility for these consumers to purchase metal when they want to, rather than need to; the sector is becoming increasingly price-sensitive. Without enduring production cuts to be achieved, by permanently closing high-cost mines, the platinum market is expected to return to surplus next year. Of course, it’s a huge challenge as a producer to make that call, incur restructuring costs and permanently close capacity, if you believe the price will recover in the short- to medium-term.” Read more

MetalMiner’s basket of industrial metals used by the auto industry, the monthly Automotive MMI®, registered a value of 85 in June, a decrease of 2.3% from 87 in May.

Automotive_Chart_June-2015_FNLAs the chart shows, this move basically undoes May’s gains and puts the automotive metals index back where it was in April. The loss nearly erased the 2.4% gain last month as palladium and platinum prices either fell or traded sideways and the other metals tracked in the index weren’t really responsible for the recent movement, anyway.

Robust Car/Truck/SUV Sales

While automotive sales remain strong in the US and abroad, those sales are not creating the necessary demand for automotive materials to move the needle this year – even as companies such as Alcoa, Novelis, ArcelorMittal and others invest heavily in automotive aluminum and steel facilities worldwide.

FREE Download: Compare Prices With the May MMI® Report.

US car buyers bought new cars and trucks at the fastest pace in nearly a decade in May, US auto sales data released by the automakers showed. General Motors, Fiat Chrysler and Honda reported increases. Toyota, Nissan and Ford saw declines.

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Bolstered by a weaker dollar, global precious metals rose last month as industrial demand for palladium was finally joined by higher gold bullion and platinum prices.

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The number of Americans applying for first-time unemployment benefits inched up by 3,000 to a seasonally adjusted 265,000 in the week ended May 2, the Labor Department said recently. This was less than the 275,000 economists predicted and within reach of the unrevised 262,000 level for the prior week—the lowest since 2000.

Global-Precious-Metals_Chart_May-2015_FNLThis is the latest sign that an interest rate hike may come from the Federal Reserve as continued improvement in the US labor market might clear the path for rate hikes. Read more

Seems that somebody forgot to tell the automotive metals that the bear market was still going on this month. Strong aluminum and high-strength steel demand, and end-user purchases, have again made auto the standout in a field of mostly down markets.

Automotive_Chart_May-2015_FNL

After flattening in April, the monthly automotive MMI® registered a value of 87 in May, an increase of 2.4% from 85 in April. A big factor was the performance of aluminum coil on the index, as its index broke resistance and soared as well.

Pool 4 Tool’s Automotive SRM Summit

China removed export taxes on aluminum, opening more markets up to the automotive-grade sheet and coil prices that automakers in the West have been experimenting with for a decade now. Prices of palladium, lead and even copper also notched strong LME growth filling strong demand from domestic and foreign automakers.

Consumer Sales Rising

In the US market, April new car sales rose by 5% from a year ago, to more than 1.463 million units as predicted in a J.D. Power and LMC Automotive‘s mid-month auto sales forecast update. April’s totals are anticipated to be the highest since April 2005.

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With April’s reading, MetalMiner‘s monthly price index tracking metals used in the automotive industry has stanched its general downward slide – the index dipped below the baseline of 100 in February 2014 and has been trending down since. The monthly Automotive MMI® registered a value of 85 in April, on par with March’s value (check out last month’s report). But with most base metals markets in a bearish mode, this index may have further to fall.

Automotive_Chart_April-2015_FNL

The downward slide had particularly begun accelerating in Q4 of last year and has continued through Q1 2015, a sign that the auto index’s basket of metals has seen the same bearish treatment as the Raw Steels, Stainless and Aluminum MMIs. Read more