Platinum price could start falling fast
Platinum price could start falling fast as investors realize that the high platinum price would lead to demand decline for platinum jewellery in China.
Platinum hit a 24-year high of 937/oz in London on Monday, and some analysts believe that it might resume an upward climb to above $1000/oz .
But yesterday Absa Corporate & Merchant Bank commodities consultant Hilton Ashton said demand for platinum by the jewellery sector fell from 2,82million ounces a year in 2002 to 2,45-million ounces last year.
"The manufacturers of jewellery in China are resisting big price moves in platinum, and if platinum is to continue running, it will be dependent on Chinese manufacturing."
Ashton said China was now the biggest consumer of platinum. "Once there is a realisation that the Chinese jewellery industry won't accept these prices, the price could fall quite quickly in a short space of time."
Ashton said that in recent years demand had outstripped supply, but suggested that with a fall in demand for platinum jewellery "we could have a surplus for the first time in many years".
Ashton played down the possibility that platinum could lose ground to cheaper palladium, following reports that there were new applications for the latter in exhaust catalysts for diesel-powered vehicles.