New Research Threatens Platinum

Platinum’s woes continue as new research threatens to undermine its pre-eminence as a catalyst in fuel cells.

A potential breakthrough in the use of carbon nanotubes laced with nitrogen to replace the costly metal with this much cheaper technology will, if successful, lead to further downside pressure on demand.

Already suffering from a sharp drop in demand as the global auto industry continues to contract, platinum and its producers are not looking a promising investment at this time.

Reports from India suggest that the jewellery industry is taking an interest in the metal now its price has dropped over 50% from its highs in 2008 and is hovering between US$ 900-1000 an ounce, around 10%  higher than gold, as we write.

But even if jewellery interest is sustained, this is unlikely to result in any thing more than a marginal uptake in demand.

Bearing in mind that platinum is used overwhelmingly as a catalyst so is entirely recoverable, along with jewellery, makes forecasting a recovery in the present economic climate simply wishful thinking.

We are firmly in the “steer clear” camp on this one. Until the global economy picks up with the automotive industry starting to thrive, platinum, with its miners facing growing costs, looks dead in the water.

Adding to the downside risk is that researchers in the auto industry continue to strive for cheaper alternatives to PGMs in catalytic converter exhaust systems.

Whether believable or not, from time to time we hear rumours of imminent breakthroughs in this technology. If this should come to pass then a lot of blood will be spilled in the PGM sector.

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