Platinum Group Climbs HigherPlatinum Group Climbs Higher
China Drives Demand as Investors Pile Into Metal ETFs
Palladiumfutures hit a two-year high and platinum neared one, with China andspeculative investors still scrambling for the metals amid expectationsfor continued gains. Bloomberg NewsCatalytic converters use palladium, and so do wedding bands.
Futureshave been lifted in recent weeks by the resurgence of industrialdemand, mostly from the auto sector. Palladium and platinum are used inthe manufacture of catalytic converters, which scrub engine exhaust.
Most-actively traded palladium, for June delivery, rose $16.85, or3%, to settle at $568.25 an ounce on the New York Mercantile Exchange,the highest settlement for such a contract since March 2008. The Maycontract ended $16.85 higher at $567.50.
Platinum rose 1% to $1,740.30 an ounce, the highest price for a most-active contract since July 2008.
These metals, part of the platinum-group-metal category, weresupported by data showing China imported about 103,600 ounces ofpalladium last month, its third-highest monthly imports on record,according to a research note from Barclays Capital. Meanwhile, platinumimports of around 377,700 ounces in March had more than tripled on year.
Investors have locked onto to the recent recovery in auto salesaround the globe and piled into platinum-group exchange-traded funds,relatively new instruments similar to mutual funds but backed byphysical assets. The growing popularity of these ETFs are pulling metalvolumes out of actively traded markets, thus exacerbating the bid onsupplies.
"As long as the investment market is in there, it's going to keepprices way up," said Miguel Perez-Santalla, vice president of sales andmarketing at metals processor Heraeus Precious Metals Management. "Wecould go over $600."
Holdings have grown by nearly 30,000 ounces since Friday in the loneU.S.-based physically backed palladium exchange-traded fund, ETFSPhysical Palladium Shares.
Palladium and platinum "prices, while frothy, and benefiting fromrecord investor interest, are unlikely to take a major step back whileChina continues to remain this aggressive," J.P. Morgan analysts saidin a research note.
Improvingauto sales in countries such as India, China and the U.S. are providingthe fundamental support, said Jim Steel, a metals analyst with HSBC.
"It continues to show a very positive outlook," Mr. Steel said of platinum-group metals.