Platinum Group Metal (PGM) pricing has been lackluster in 2011. Rhodium, one of the PGM’s with substantial industrial, as opposed to bullion, application has been in decline all year from a peak of $2500/toz in February 2011 to the present EIB price of $1640/toz. Rhodium demand is substantially automotive in character, but there are significant industrial catalyst application as well.
The extended decline of Rh pricing certainly does not point to a nascent ramp-up in end-use demand. Rhodium was at an all time high of $10,100/toz in June of 2008. The extreme volatility of Rh pricing during 2008 is an indication of the kind of buying mania in effect then.
Gold continues to track upwards on a steady ramp despite the occasional short term disturbances. Gold opened today at $1720.57/toz on the EIB.
Platinum is a curious PGM. It has significant jewelry and investment demand as well as industrial application. Over this year it drifted up to $1750/toz (+/-) and dropped to the low $1500’s in October 2011. The mania for gold does not seem to spill over to platinum in a way that is obvious to me.
Then there is sickly ruthenium. Ruthenium was steady at $180/toz until August when it began a decline that appears to be in effect today at $120/toz. Ruthenium has no significant jewelry or bullion demand. It is an industrial metal with application in very sophisticated technologies like electrodes, semiconductors, turbine engine metallurgy and catalysts. The decline of Ru pricing, as with Rh, cannot fuel optimism that there is an impending uptick in fundamental industrial output in the short term.
It’s difficult to gauge what is really happening in the PGM market just by looking at pricing. But there is talk of stress on the Pt supply side. Major producers like Lonmin and Anglo American Platinum have settled for substantial wage hikes over the last year. This increase in labor cost, with softening demand, is placing PGM producers in danger of going in the red by the start of 2012.