Commodities: Platinum

Prized for its extreme resistance to corrosion and its ability to catalyze reactions – such as those vital in the refining of crude oil into gasoline – platinum is essential in a variety of laboratory and industrial applications. The catalytic converter – a vehicle emissions control device – is the most widely used application of platinum group metals (PGM). Jewelry is the second largest sector of PGM demand. Platinum is also used for biomedical applications, crucibles, dental alloys, electronic devices, glass, hard disks, silicones, turbine blades and watches.

Contract Specifications

Production        

South Africa is the world’s largest supplier of platinum, producing 120,000 kilograms annually. It holds the largest known reserves of PGMs and extracts about 75% of the world’s platinum. Other top producers include Russia – a distant second with 23,000 kilograms – Zimbabwe, Canada and the U.S. Stillwater Mining Company is the only producer of PGMs in the U.S.

Price Drivers

The majority of annual production occurs in South Africa, and trends and conditions in this volatile emerging market affect platinum prices. Other price drivers include:

• economic and political circumstances
• natural disasters
• mining strikes
• the health of the auto industry
• technological advancements (for example, electric cars could decrease demand for catalytic converters)
• substitution of other (less expensive) metals