Platinum in demand, prices set to rise

According to a poll of analysts by the Reuters news agency, the price of platinum could increase by 50% this year.

Platinum is used in the jewellery and automotive industries. It is used in catalytic converters to reduce emissions from petrol engines.

Demand for platinum has increased since stricter rules have come into effect with regard to vehicle emissions.

Meanwhile, prices are being pushed higher by production problems in South Africa.

The Reuters poll sees the median price of platinum at $2,000 an ounce in 2008 and $2,100 in 2009. Last year, it was $1,304.

Anglo American, has recently been hit by power cuts and strikes. The group produces 40% of global platinum output.

Peter Fertig, a consultant at Dresdner Kleinwort, said the structural problems with power supply in South Africa are not being resolved in the short-term.

Edel Tully, a metals analyst at Mitsui Global Precious Metals, said that of the five precious metals the firm would remain most bullish for platinum.

Mr Tully believes that the metal can beat its record high of $2,290 and trade up to $2,500 during 2008.

Platinum is considered a strategic metal by the US Government as a military resource. It is estimated that approximately 20% of the products purchased by today’s consumer either contain platinum or use it in production.

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