Mumbai: India’s annual consumption of platinum is expected to grow by 10% to 12 tonnes by fiscal 2010 from present 10 tonnes on increased demand from automotive, jewellery and pharma sectors, despite higher prices, an industry official said here.
India’s platinum demand in the current fiscal year is estimated at 10 tonnes and is likely to grow by 10% each year to touch 12 tonnes by financial year 2010, an official at the Multi-Commodity Exchange (MCX) said.
MCX, the leader in futures trading in gold, silver and crude oil, has commenced trading in platinum last month and is seeing an increasing interest by traders.
Platinum September 08 contract on the MCX was hovering at Rs 27,931 per 10 grams on 11 July. September contract for Platinum on MCX opened at Rs 28,450 per 10 grams in June.
“Platinum futures has 93% correlation with gold and 94% with silver,” the official added.
The platinum futures witnessed wide fluctuations on signs of US demand for cars weakening in foreign markets in the recent past. Platinum for immediate delivery fell $7.50 to $2,068 an ounce on the Tokyo Commodity Exchange last week.
Automakers worldwide account for more than 60% of platinum demand, according to estimates by Johnson Matthey Plc, which makes about one-third of the world’s platinum auto parts.
The demand for this precious metal is expected to come down as auto sales are expected to fall this year. The estimates for this year’s US industry sales is pegged at 14.3 million vehicles from 14.8 million, and to 14 million from 15.3 million vehicles for 2009.
In India, platinum demand is growing due to expansion of auto sector in a big way. The catalytic converter(auto catalyst)the largest application of the metal, acts as a catalyst to reduce levels of carbon monoxide, hydrocarbons and oxides of nitrogen, market analyst Ajay Shah said.
India is the world’s biggest gold consumer importing over 700 tonnes of gold a year, but platinum finds only small shelves in upmarket jewellery shops, owing to its high price.
Indian jewellery sector also uses platinum widely and is the second largest sector for platinum demand.
85% of platinum jewellery is made and consumed in China, Japan and the USA.
The physical and chemical properties of the platinum also make it invaluable to many industries like chemical-catalysts for processing silicon, dental alloys for dental restorations, fuel cells-catalysts for power generation, medical anti-cancer drugs and petroleum catalysts for gasoline refining.
Platinum is also used for investment purposes to make coins, bars and jewellery.
It is precious than gold and the silvery-white metal is corrosion-resistant.
World production of platinum is over 180 tonnes (six million ounces) which is around seven per cent of gold production and just one per cent of silver. It is found in very few places in the world, mainly in South Africa and Russia and to a lesser extent in Zimbabwe, Canada and South America, Shah said.