Platinum is the rarest of all precious metals. It has
several unique chemical and physical properties that make it essential in a
wide range of industrial and environmental applications. Platinum is also
considered as one of the finest of all jewellery metals.
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Major Characteristics
- Platinum as a pure
metal is silvery-white in appearance, lustrous, ductile, and
malleable. It is widely used in several industrial applications as it
possesses high resistance to chemical attack, excellent
high-temperature characteristics, and stable electrical properties.
- Platinum is
corrosion resistant and is more precious than gold. Platinum's wear-
and tarnish-resistance characteristics are well suited for making fine
jewelry.
- Platinum is traded
as a commodity with prices determined by market forces. It is also a
widely sought after investment avenue in recent years. However, it is
not widely treated as a monetary base like gold
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Global Supply Demand Scenario
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- The supply of
platinum is met by mine production, auto catalyst refining and
jewellery refining with their respective contribution estimated to be
6.15 million ounces, 1 million ounce and 0.9 million ounce in 2008.
- The annual
production of platinum has averaged around 6.2 million ounces (193
tonnes) in the previous three years from 2006 with more than 90% of
the production coming from South Africa (76%) and Russia. The other
producers are United States of America, Canada and Zimbabwe.
- The production of
platinum is highly dependent on South Africa's production with 2009
output from South Africa, Russia, USA and Zimbabwe estimated to be 4.7
million ouces, 0.74, 0.25 and 0.33 million ounces respectively.
- The platinum mining
industry is very capital intensive and it is reported that
approximately 10 tonnes of raw ore has to be mined to produce just one
pure ounce of platinum.
- Unlike other
precious metals like gold and silver, there are no large above-ground
platinum stockpiles to protect against significant supply disruptions.
Some estimates predict that existing above ground reserves would last
only for a year, if platinum mining was suddenly stopped.
- The demand for
platinum mainly comes from auto catalyst, jewellery, other industrial
application and investment. The other industries uses platinum are
electronics, glass and petroleum industry.
- The total global
demand for this rare metal is reported to be around 7.79 million
ounces in 2008, with consumption by auto catalyst (used in
automobiles), jewellery, investment and other industrial applications
estimated to be around 3.8, 1.6, 0.45 and 1.9 million ounces
respectively.
- North America,
Europe, China and Japan are the most important economies accounting
for majority of the global platinum consumption.
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World Gold Markets
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The London Platinum and Palladium Market (LPPM), which
provides the industry benchmark price ‘London fix’
Derivative exchanges at New York – CME (COMEX), TOCOM (Japan), MCX (Mumbai)
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Indian Platinum Market
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- India's appetite for
platinum has been steadily increasing in recent years on account of
the country's economic progress leading to rising industrial demand
and increasing preference for platinum jewellery in urban areas.
- India's consumption
of platinum in 2008-09 is estimated to be around 932 kgs, which is
expected to rise to around 1200 kgs in 2009-10.
- The approximate
consumption by various sectors in India is estimated to be automobile
(55%), petrochemicals (25%), jewellery (15%) and electronics &
dental (5%).
Market Moving Factors
- Indian platinum
prices are highly correlated with international prices. However, the
fluctuations in the INR-US Dollar impact domestic platinum prices and
have to be closely followed.
- The global prices
are driven by a host of factors with macro-economic factors like
strength of the global economy, currency movements, interest rates,
rising importance of emerging markets being major influencing factors.
- Economic situation
in major consuming countries like USA, Europe, Japan and China
influence consumption on account to its high demand from industrial
sectors, especially automobiles.
- Platinum production
is highly skewed with just four mines and two countries producing
almost 90% of the total annual production. Prices are influenced
profoundly by production disruptions, policies taken in producing
countries. The influence of this factor is enhanced by the absence of
any significant global stocks of platinum in the world, unlike that of
gold and silver. Additionally, platinum mining is a very capital
intensive industry, which discourages entry of new players.
- Any change in global
stocks, of which a major portion is present in Russia do influence
prices.
- The price movement
in other precious metals, especially gold is a major influencing
factor.
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Measurement
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Weight Conversion Table
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To Convert from
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To
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Multiply
by
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Troy Ounce
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Grams
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31.1035
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Troy Ounce
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Kilograms
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0.0311035
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Million Troy Ounce
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Tonnes
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31.1035
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Kilograms
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Troy Ounce
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32.1507
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Tonnes
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Troy Ounce
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32150.7
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