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Platinum hits 10 year euro lows on trade war worries

posted onJuly 2, 2018
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The price of platinum, which remains at historic lows compared to gold, fell to a 29-month low at $838 per ounce on the first trading day of H2 2018.

For Euro investors however, the grey metal fell to €719 per ounce – the lowest level since 6 January 2009, as the US Dollar strengthened again, according to BullionVault.com, the world’s biggest online investment bullion service. 

The metal which is primarily used in catalytic converters for diesel-powered vehicles, has suffered a drop in price in recent years, attributed mostly to the expectations of "changing consumer interests" as they purchase more gasoline vehicles vs. diesel vehicles. 

Diesel technology has been under pressure since the Volkswagen scandal. In 2015, it was revealed that the German vehicle manufacturer had cheated on emissions tests in the US. The cars would put out lower emissions in order to pass tests, but when operating normally, the vehicles would pollute more than regulations allow. 

Another factor impacting the price of platinum is the concerns about a trade war after U.S. President Trump announced tariffs on steel and aluminum imports, forcing a broader commodity selloff. 

“Escalating global trade tensions bring a risk of demand destruction across commodity markets as costs rise for end-users and access to materials is restricted,” US investment bank Morgan Stanley said in a quarterly report.

While Morgan Stanley’s June 28 note said some of its 2018 price forecasts for metals had been raised, it remained cautious.

Last month,  the World Platinum Investment Council (WPIC) in its quarterly report warned that platinum supply will tighten in 2018 compared to 2017, with South African mine supply falling in Q1 to its lowest level since 2016. More than 75% of the world's platinum is mined in South Africa.

WPIC also said global demand for platinum is forecast to be marginally up for the year, despite a fall in total global automotive demand, with growth in commercial vehicles insufficient to offset lower demand from passenger cars. These fundamental shifts will contribute to a reduction in the level of overall surplus for the year, down to 180 koz from a revised surplus figure of 315 koz in 2017. Q1 2018 was in deficit by 125 koz WPIC said. In line with previous forecasts, investment demand is predicted to be 250 koz in 2018 

Established in 2014 by the leading platinum producers in South Africa,WPIC is a market authority on physical platinum investment, formed to meet the growing investor demand for objective and reliable platinum market intelligence. WPIC’s members are: Anglo American Platinum, Impala Platinum, Lonmin, Northam Platinum, Royal Bafokeng Platinum and Sibanye-Stillwater.