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Commodity Insights
Platinum consumption. Platinum is also used in the automotive industry, as a key
component of catalytic converters and as a catalyst in fuel cells. It is also
Introduction gaining prominence as a component of chemotherapy in the battle against
Platinum is a metal that is a silvery-white in color. It is considered to be cancer, and can be seen in other hospital equipment such as thermometers
a precious metal, thirty times rarer than gold, and until recently in human and electrodes. A share of the consumer market is also devoted to petroleum
history has been very difficult to implement in any practical fashion, due refining, so it is clear that platinum is a multi-faceted material. Japan and
to the difficulty metal smiths faced in tempering it. Previously it had to be the United States are the main consumers of platinum globally, with Japan
mixed with iridium in order to be moldable, but this changed in the 20th consuming approximately 85% of all the platinum jewelry that is produced.
century with the advent of new metal-smithing techniques: this new ease of Around 80% of the world supply of platinum originates from South Africa,
means platinum now has many of the qualities necessary for inclusion in the with the rest mostly residing in Russia. A small quantity can be found in
global commodity trading system. Platinum has incredibly high temperature North America, but this only accounts for 6% of the global share.
resistance, and has highly rated electrical properties. It also does not oxidize
on contact with the air. Fundamental Facts
Platinum, as a precious metal, obviously has significant appeal. It is one • The platinum price (particularly the platinum futures price) is most
of the rarest metals in the world, and is only found in its pure form in two
geographical regions: South Africa and Russia. Despite its rarity, platinum affected by the increasing demand for the metal, which shows no sign of
is still considered to be an extremely useful substance, so the demand for it abating.
is always increasing. • When this is combined with the difficulty in procuring platinum due
The main consumer market for the platinum commodity is the jewelry to limited geographical areas from where it can be mined, it is easy to
market, which accounts for approximately 51% of the global platinum appreciate why the price of platinum options and futures is generally so
high.
• With so much platinum tied up in the consumer goods market, the price
of platinum options can be affected by consumer trends with regard to
jewelry. If platinum jewelry falls out of favor, the price of platinum
could drop considerably.
• The potential for loss or gain is massive in platinum trading, and for this
reason it is often mesmerizing to market traders.
• Another factor that affects the platinum price is the price of palladium,
a precious metal with similar qualities: it is suitable as a substitute for
platinum in many areas of use.
61 | MEX NEPAL YEAR BOOK 2017
