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Platinum group metals suffer from low car sales and idle mines

Record prices for palladium and rhodium have gone into reverse as car sales continue to plunge in the wake of the coronavirus pandemic.

Registrations in the European Union dropped 55.1% in March compared to the same month last year, according to the European Automobile Manufacturers’ Association. In the US, Toyota Motor North America witnessed a similar trend last month, with sales down 36.9%.

South Africa’s lockdown has also had direct consequences on the international metals market. The country, which produces over 70% of the world’s platinum, over 30% of palladium and a significant share of rhodium has curtailed an estimated 60% of global platinum supply.

MarketWatch reports that palladium futures prices PAM20, +1.43% recently turned negative for the year. Prices settled at US$ 1 892.20 an ounce on 22 April, down 0.9% from the end of 2019. That’s a far cry from the record settlement of US$ 2 711.70 on 27 February when prices traded more than 42% higher for the year. They edged up to finish at US$ 2 001 on 23 April.

That day, platinum futures PLN20, 1.13% settled at US$ 788 an ounce, down more than 19% for the year.

Rhodium spot prices on the same day stood at US$ 8 200 an ounce, according to data from specialty chemicals company Johnson Matthey. They are still up nearly 36% year to date but had reached a record US$ 13 800 as recently as 12 March. Three-way catalytic converters, which contain more rhodium than other units, had boosted demand for the rare metal until recently.

Volatility in the platinum group metals market is expected for between three to six months.

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