Platinum prices’ pullback after hitting a 6-year high

Written by: Faith Maina
February 12, 2021
  • Platinum prices dropped by 1.46% after surging to a 6-year high a day earlier.
  • Automakers are et to shift to platinum due to the significant price difference from palladium.
  • Tight emission laws and the expected recovery of the auto industry will push prices higher.

On Friday, platinum prices curbed its previous gains after reaching a 6-year high on Thursday. The expected rise in car production, coupled with the tight emissions standards, has created a favorable environment to trade platinum. As at 09.00 GMT, the precious metal was down by 1.46% to trade at $1222.47.

platinum prices

Platinum demand outlook

Platinum prices have been on the rise as the 2021 outlook indicates higher demand for the precious metal. On 10th February, Johnson Matthey released its pgm market report. The firm, which is a key manufacturer of the catalytic converter, has forecasted the rise in auto demand. According to the released report, the demand in 2021 is set to grow by about 13% to surpass the 13 million oz mark. This will be close to the record set in 2019, placing it as the second-highest level in history.

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At the same time, the stringent laws on emissions have created a favorable setup for the soaring of platinum prices. Europe and the US are tightening their emission standards based on the US Federal Tier 3 and Euro 6d laws. Furthermore, the nationwide implementation of China VI emission standards will increase the demand for this precious metal.  

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Platinum vs. palladium

Platinum and palladium are both used in the automobile industry in the catalytic converters. With the forecasted rise in the demand for autocatalysts, both metals have recorded a surge in prices. On Thursday, platinum prices soared to a 6-year high. Similarly, palladium was trading at a 3-week high on Wednesday. Since the beginning of February, palladium prices have risen by about 5.86%. Over the same period, platinum prices have been up by around 11.86%.

On Friday, palladium and platinum were trading at $2328.95 and $1236.05 respectively. Despite having the same use, the price of palladium has been significantly higher than that of platinum. This difference has contributed to the rising demand for the latter metal. Besides, automakers are likely to shift to platinum for gasoline catalysts as they seek to lessen the aftertreatment system expenses.