Platinum falls to 13 year low premium over palladium – “Dieselgate” blamed

By Andre Janse van Vuuren and Ranjeetha Pakiam

(Bloomberg) — Platinum’s premium over palladium is at the lowest in 13 years on concern that the Volkswagen AG emissions scandal will turn car buyers toward gasoline vehicles.

Platinum bars are stacked at the safe deposit boxes room of the ProAurum gold house in Munich March 6, 2014. REUTERS/Michael Dalder
Platinum bars are stacked at the safe deposit boxes room of the ProAurum gold house in Munich March 6, 2014. REUTERS/Michael Dalder

Platinum, mainly used in devices that curb harmful gases from cars and particularly in diesel types, costs about $229 an ounce more than palladium, the least since 2002. Platinum prices have slumped 8 percent since mid-September, when the German carmaker admitted to attempts to rig U.S. pollution tests for diesel models. Palladium, used mostly in gasoline vehicles, has gained 11 percent in the period and prices touched the highest in almost three months on Thursday.

“The reaction in the financial markets is clear that diesel cars will be less in demand in future and gasoline cars will be more in demand,” Georgette Boele, a strategist at ABN Amro Bank NV in Amsterdam, said by phone on Wednesday. “That is why that spread between platinum and palladium has moved as much.”

Platinum for immediate delivery slid 0.4 percent to $903.24 an ounce at 2:41 p.m. in New York, and this week touched the lowest since 2008. The metal has slumped 30 percent in the past year as slower economic growth cut demand and supply increased after South African mine strikes ended last year.

Palladium for immediate delivery added 3.3 percent to $674.50 an ounce, after touching $680.65, the highest since July 7.

Shares in world’s largest platinum producers advanced. Anglo American Platinum Ltd., the biggest, climbed as much as 9.1 percent in Johannesburg. Impala Platinum Holdings Ltd., ranked second, gained as much as 4.6 percent, while Lonmin Plc surged 20 percent in London.