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Platinum makes world go round

Nidhi Nath Srinivas, TNN Mar 4, 2005, 12.16AM IST

NEW DELHI: Prince Charles may have picked a platinum ring for Camilla, but she is likely to have more of it in her cars, flat-screen TV, DVD, mobile phone and hard disks than on her finger.

Platinum is the world's most expensive metal and guess who's doing the pushing? High-tech eco-friendly cars and LCD (liquid crystal display) glass for consumer electronic goods. Unlike gold, platinum demand is riding the crest, mainly due to automotive and industrial demand that shows no signs of flagging, at least for now.

Out of the 6.5m oz platinum consumed in '04, the autocatalysts and other industrial sectors together, bought 62%, beating jewellery at 38%, according to Johnson Matthey, the world's leading consultancy on the platinum group metals.

Last year, diesel car engines used up over 1.3m oz of platinum in Europe alone. In Japan, which dominates LCD glass, platinum imports jumped by over a quarter in '04. But the party seems to have just begun. Platinum is a key component in diesel engine emissions-control technology that is now becoming standard among car manufacturers in the West.

Diesel cars are becoming increasingly popular in Europe and were almost half of all new car sales last year or 7m units. Over half of all cars sold in the last three months of '04 were diesel. In the USA, sales of hybrid gas-electric cars almost doubled in '04, according to industry analysts JD Power.

Here's why platinum is useful. Whether it is the oxidation catalyst or particulate trap of a diesel passenger car, or the retrofitted catalyst on a city bus or large truck, including platinum in the pollution abatement technology optimises the process of turning toxic emissions into less harmful gases and therefore greatly benefits the environment.

In Europe, a new law on automobile carbon monoxide and smoke emissions from January '05 — the Euro IV — is tightening standards for automakers.

That is pushing auto catalyst manufacturers into using more platinum, because the norms are easier to reach if you load more platinum in diesel oxidation catalysts.

Experts say platinum-based catalysts are able to deliver the required performance under operating conditions which are specific to diesel engines, ie lean burn operation and low-temperature exhaust gas. This is because platinum is highly active in the low-temperature environment and it is both sulphur and oxidation-resistant.

Meanwhile, the LCD glass industry has consumed over 240,000 oz of platinum last year because of a bullish global consumer goods market. Several new furnaces are being constructed in Asia to manufacture LCD glass, which has led to a boom in platinum demand.

LCD glass is used in common household electronic gadgets like laptops, computers, DVDs, mobile phones, cameras, digital music players, and flat-screen TVs. New glass fibre factories in China also boosted demand for platinum.

So, are platinum prices likely to hover around the current level of $880/oz? Industry watchers say that if one ignores the speculative activity of commodity funds on the bourses and the impact of the dollar, then based on just fundamentals, prices should ease, with better supplies.

If prices rise any higher, Chinese jewellery makers may start exiting. However, as the diesel car and LCD glass sector is likely to be unperturbed by the present high prices, overall demand would still be strong. So, easy predictions are impossible right now.