Gold takes the sheen off platinum

Gold prices have always had an edge on platinum as far as growth rate is concerned. At the end of September gold prices have risen to $473 an ounce, a gain of $58 from the same period last year, while platinum prices rose by $75 to $929 an ounce by September end. Platinum has thus recorded a growth in prices of approximately 9 per cent while gold surged by 12 per cent.

Experts believe gold will always maintain its leadership in precious metals trade as the yellow metal has been universally accepted as an investment option. Secondly, the depreciation rate in platinum is comparatively higher than that of gold.

Experts say that if gold loses 1 gram in 10 years, platinum loses 3 gms in the comparable period. Therefore, the demand for platinum will remain low in comparison with gold.

Platinum jewellry in India was launched five years ago. Demand is yet to pick up as consumers' response has been lukewarm. Platinum Guild International - a body responsible for promoting platinum jewellry in India - is targeting platinum consumption to grow up to 5 tonne in the next four-five years. Consumers though are a little hesitant because of rising prices and depreciation in quantity over the years.

No absolute consumption data for platinum jewellry is available because the market is scattered in nature. A leading precious metals trader in Mumbai believes that platinum jewellry consumption is too low to be quantified. But, the consumption growth rate could grow substantially as platinum jewellry is now available in all smaller Indian markets.

"We launched platinum jewellry in two major cities in 2000. It is now traded in 63 major and minor cities in India. We are creating awareness programmes by inviting consumers for shows," said Vaishali Banerjee, manager, India, Platinum Guild International.

Platinum is increasingly being seen as a status marker among the cash rich. China's largest jewellry manufacturer has revealed that it is planning to further develop its platinum market on the back of strong performance in the sector.

India imports approximately 75 per cent of platinum from South Africa through MMTC. Major suppliers to India are Anglo Platinum, Impala Platinum, Longweell Platinum among others.

The platinum market was more or less range-bound last year and is expected to remain so this year as well. With demand and supply both expected to increase moderately, platinum prices should continue to remain around current levels.

Demand for platinum in 2004 edged up by less than 1 per cent for the second year in succession, rising by just 50,000 ounce to 6.58 million ounce. Mine supply rose by 3,00,000 ounce to 6.5 million ounce as South African output exceeded 5 million ounce for the first time, resulting in a narrow deficit of 80,000 ounce.

Platinum use in India is largely growing as an autocatalyst. World demand for platinum for autocatalysts rose by 7 per cent in 2004 to 3.51 million ounce, spurred by growing European diesel car production and by tightening emissions limits for cars in Europe and for heavy vehicles in Japan.

In India, the autocatalysts demand is growing approximately 25 per cent year-on-year. Industrial demand climbed by 11 per cent to 1.53 million ounce, mainly due to rising production of LCD glass in Asia, including India.

However, worldwide jewellry demand fell by 12 per cent to 2.2 million ounce. Manufacturers in China reduced purchases to just over 1 million ounce in reaction to the high and volatile prices in the beginning of the current year.

But, towards the end of the current year the demand is expected to grow at a regular pace.