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Automotive sector drives demand for platinum: exchange traded funds are expected to boost the price of platinum in the short term. Priscilla Ross looks at this and other circumstances surrounding a widely-used metal vital to the economies of southern Africa.

Article Excerpt
PLATINUM IS EXPECTED to trade between U$1200 and US$1400/oz in the next six months. The launch of platinum exchange traded funds (ETFs) will potentially provide upward pressure on the price. However if funds become bearish towards commodities in general the price could weaken but at US$1200/oz consumer and speculative purchasing can be expected to give renewed price support according to London-based Johnson Matthey (JM).

Despite only an overall 14 per cent rise in price in 2006 the platinum price was high throughout the year and peaked at US$1390/oz. Global demand for platinum rose by 1.2 per cent to 6.78mn oz in 2006 supported by increased usage for auto-catalysts and a range of industrial applications. This sector's growth more than offset the decline in consumption of jewellery. Supplies of platinum also advanced in 2006, rising at a slightly higher rate than demand to reach a total 6.79mn oz.

The main growth driver was South African output, which...

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