Platinum & Palladium prices slip on auto consumption worries

Palladium and platinum prices have lately dropped sharply, as fears mounted about demand from the automotive sector following rising infection rates of the Delta variant around the world, according to media reports.
The price of palladium fell 1.6% to $2,386 per ounce, while platinum lost 1% to $983 per ounce. Since hitting a record high of $3,019 on 4 May, palladium has fallen by 21% – taking the metal into bear-market territory. Platinum is down by 27% since hitting its cyclical high of $1,349 in February.
Both precious metals are used widely in the motor industry in the manufacture of catalytic converters, but demand has fallen this year as shortages of other vehicle components, particularly semiconductors, have constrained automotive production.
It is estimated that global auto production could fall by 7.1mn vehicles in 2021 as supply chain bottlenecks continue due to economic disruption caused by rising COVID-19 cases.
While Toyota announced recently that it expects output to fall by 40% in September as it suspends production lines due to a shortage of parts, Germany's Volkswagen said volatile and tight semiconductor supply meant that adjustments to production cannot be ruled out. This has impacted investor sentiment in the platinum group metals (PGM), with market positioning swaying in favour of the sell side.

Aruna Gaitonde, Editor in Chief of the Asian Bureau, Rough&Polished