Friday, 22 July 2011

Slowdown in auto sales hits precious metals prices




The falling sales in automobile industry in the first half of 2011 has caused concern for the precious metals like palladium, platinum and rhodium, which are used in the industry. Market expects a drop in prices of these metals if the automobile demand slows down across the globe. Prices right now are volatile and a production cut in these metals may put a check on sliding prices. 

Talking to ET, Sudam Maitra, managing executive officer (supply chain) of Maruti Suzuki, said: "Prices of precious metals not only depend on physical demand but also on the quantum of trading. Right now rhodium is maintaining a stable price trend. But there is a big volatility in palladium and platinum prices. Palladium is showing an upward trend and platinum is slightly up. At Maruti, we have already made almost 100% forward contract for precious metals for our yearly requirement." 

Rhodium price is now hovering around $1,940 per ounce, which has dropped from $2,040 a month ago. Metal traders said that around 57% of palladium demand comes from automobile industry where it is used in catalytic converters. "Palladium price is now hovering around $795 per ounce. It is yet to cross $800 mark. However, palladium has appreciated a bit in one month. A month ago it was priced at $720 per ounce.

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