Platinum Falls in N.Y. on Catalyst Replacement; Palladium Drops

Platinum Falls in N.Y. on Catalyst Replacement; Palladium Drops

By Halia Pavliva

April 24 (Bloomberg) -- Platinum fell in New York after Mitsui Mining & Smelting Co. reported developing a silver-based diesel exhaust catalyst, replacing the more expensive metal. Palladium also declined.

Mitsui, a partner in Japan's biggest copper smelter, plans to start selling the silver-based devices in Japan, the U.S. and Europe in 2012, according to a statement yesterday. Platinum has jumped 54 percent in the past year, partly on expectations that demand for automotive catalysts will rise as governments impose tougher pollution controls.

The announcement ``has knocked some of the wind out of platinum's sails,'' said Jon Nadler, a senior analyst at Kitco Minerals & Metals Inc. in a report today. ``There is hardly any surprise in the fact that users of very expensive metals are scrambling to find replacements for the same. Evidently, some are succeeding in their quest.''

Platinum futures for July delivery fell $23.80, or 1.2 percent, to $1,995 an ounce at 10:28 a.m. on the New York Mercantile Exchange. The metal reached a record $2,308.80 on March 4. Most-active futures declined 0.9 percent in the past five sessions before today.

Mitsui Mining follows Japanese automakers Nissan Motor Co., Mazda Motor Corp. and Daihatsu Motor Co., which last year announced plans for parts that reduce platinum usage to cut costs. Mitsui said the silver-based technology is for use in farming and construction machinery, rather than car engines.

Consumption by automakers accounts for more than 60 percent of global platinum demand, according to estimates by Johnson Matthey Plc, which makes about one-third of the world's auto catalysts.

Palladium

Palladium futures for June delivery fell $5.30, or 1.2 percent, to $442.25 an ounce in New York. The price gained 18 percent this year before today. Most-active futures fell 2.7 percent in the past five sessions before today.

Both platinum and palladium are used to make watches and jewelry as well as pollution-control components for gasoline and diesel engines. Some investors buy metals, such as platinum and palladium, to preserve value when the dollar declines versus the euro and other major currencies.

``We suspect that the overall price bias in metals could be lower over the course of the next day or so given the surprising rally in the dollar, which has gained ground against the euro for a second day in a row,'' Edward Meir, an analyst at MF Global Ltd., said today in a report.

The euro fell 1.1 percent to $1.5713 at 10:35 a.m. in New York as reports showed German and French business confidence fell this month, indicating the U.S. economic slowdown is spreading to Europe. The dollar dropped 8.9 percent against the euro this year before today.

The UBS Bloomberg Constant Maturity Commodity Index of 26 futures declined as much as 1.1 percent today, dropping for a second straight session.