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MARKETS AND BUSINESS Platinum group metals: the new gold Whereas gold reserves in South Africa are decreasing and mining it has become more difficult, sales of platinum group metals, including palladium and rhodium, are now double those of gold. The metals, which are refined and smelted in the country, account for 15% of South African exports. Usage of platinum in jewellery accounts for just 22% of demand compared with 45% in 1999. However, demand in the automotive industry for emissionreduction catalysts is increasing. The price of platinum is expected to rise to over $1300/ounce, helped by the launch of bullion exchange-trade funds (ETFs) in the finance sector. Palladium, a cheaper metal, is being increasingly used in petrol vehicles, but platinum remains the only choice for diesel vehicles. Europe is the largest consumer of platinum since about 50% of new vehicles run on diesel. The introduction of ETFs has led to increased platinum demand, resulting in increased mining investment, especially in South Africa which has 80% of global platinum reserves. Economist, 12 May 2007, 383 (8528), 82-83
Platinum continues irresistible rise According to Johnson Matthey, the world surplus of platinum will increase in 2007. A graph gives platinum prices on the London market 3 Jan 2006-14 May 2007. Platinum has increased to $1329/ounce. A table gives platinum supply and demand by application for 2005-2006. In 2006, production was 6785 M ounces. It exceeded demand (210 tonnes) by only 10,000 ounces (310 kilos). However, S African mines are expected to increase mineral output by 15%, compensating for a fall in Russian exports. Platinum use by the automotive sector has risen by 11% to 4.2 M ounces with two-thirds for catalytic converters.
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led to more interest in the recycling of these metals from used cars (mainly from catalytic converters). The price of palladium and platinum ingots has increased 10% since Jan 2007. According to GFMS, platinum recycling has risen by two-thirds over a 7 year period to 27 tonnes in 2006. This represented a tenth of world supplies and the third largest source, ahead of the mining group Norilsk. Palladium recycling jumped by 20% in 2006 to a record 24 tonnes. This was also a tenth of world supply and was larger than the output of the S African firm Impala. In Europe, palladium recycling increased by 25%. GFMS expects similar growth to continue until 2011. With increased production from S African mines, there may not be sufficient demand to absorb the recycled material. The impact of recycling will be much later for platinum. European platinum recycling increased by only 10% in 2006.
platinum market has been driven by regulatory changes in the motor car industry. Almost 75% of the world’s platinum is used in catalytic converters, and supply has been squeezed so much that the jewellery market has been reduced. Thirdquarter production numbers from Aquarius, issued late in Apr 2007, were a slight disappointment, showing a fall of 9% against the previous quarter. However, with operations exclusively in South Africa, Aquarius has benefited from being one of the lowest cost platinum producers. Wage and capital goods inflation is certainly a cause for concern but with demand for platinum is unlikely to be matched by supply in the near term the chances of a sharp correction are slim. Aquarius is well positioned in the rhodium market. There is a global shortage of rhodium which is currently trading at $6000/ounce, nearly 10 times the price of gold.
La Tribune, 2 May 2007, (3655), 17 (in French)
The Independent, 4 May 2007 (Website: http://www.independent.co.uk)
COMPANY NEWS Albemarle reports 1Q 2007 results Albemarle Corp reported net income of $58.1 M for 1Q ended Mar 2007 (net income of $34.4 M in 1Q 2006), due to strong performance in each of the company’s three business segments. The company reported net sales totalling $589 M for 1Q 2007 ($607 M in 1Q 2006). Catalysts recorded net sales of $235.8 for 1Q 2007. Catalysts segment income for 1Q 2007 increased 56% to $39.4 M during 1Q 2007 due to higher pricing and increased FCC refinery catalysts and polyolefin catalysts volumes, partially offset by increased raw material costs.
The increased scarcity and rising prices for platinum and palladium has
BASF has emerged as the leading player in the fine and speciality chemicals market, demonstrating another stellar performance in 2006. The company recorded a 23.1% yearon-year growth in sales to €52,610 M, while EBITDA increased 18.1% to €9723 M. Net income rose 6.9% to €3215 M. An estimated €4.2 bn was added to sales with the acquisition of Johnson Polymer, Engelhard, and Degussa Construction Chemicals, which are expected to be completely integrated by mid-2007. The strongest business segment of BASF in 2006 was Chemicals, comprising Intermediates, Catalysts, Inorganics, and Petrochemicals, although the division’s 43% sales growth was largely attributed to the Engelhard acquisition.
Albemarle 1Q 2007 results, 23 Apr 2007 (Albemarle Corp, 330, South Fourth Street, PO Box 1335, Richmond, VA 23210, USA. Tel: +1 804 788 6000. Fax: +1 804 388 7686. Website: http://www.albemarle.com)
Speciality Chemicals, Apr 2007, 27 (3), 12
BASF Japan will be running the operations of Engelhard Japan and Engelhard Asia Pacific, former Japanese units of Engelhard Corp, particularly their activities on skincare products’ ingredients, speciality films, sparkling pigments, and kaolin.
La Tribune, 15 May 2007, (3663), 20 (in French)
Used cars provide source of palladium
Firms surf the wave of recovery: BASF
Platinum has a distinctive place in commodities as a precious metal whose primary market is industrial. Whereas the price of base metals has been driven by Chinese demand, the
BASF Japan merges former Engelhard units