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Platinum may bounce back to above $1,000 an ounce in the second half of 2018

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LONDON (Scrap Register): Negative news reports about diesel-powered vehicles are a stubborn hurdle for platinum for now, but the metal is likely to hold up over the longer term, said Standard Chartered.

The spot platinum was down $8.65 at $960.20 an ounce after last trading above $1,000 on February 27. On that day, a German court ruling allowed cities to ban diesel vehicles showed that platinum prices remain highly sensitive to diesel air-pollution headlines, said Standard Chartered.

The metal is used for catalytic converters in diesel-powered vehicles. The bank says its European auto-catalyst demand forecast for platinum is almost 200,000 ounces lower than the forecast two years ago mainly due to diesel engines’ falling market share.

“Further exacerbating demand for platinum this year is the projected lower loadings due to 6d-TEMP regulations that are expected to drive a shift towards non-PGM [platinum group metals] technology,” Standard Chartered added.

“However, we believe the floor is better supported than previously for several reasons: increasing price-elastic demand emerging from China’s jewelry sector; fuel-cell vehicles gaining traction, albeit from a low base; the heavy-duty diesel sector is set to grow in India and China; and perhaps most importantly, CO2 emissions have risen in markets where diesel is losing market share, thus in order to meet targets, diesels will not be entirely neglected,” Standard Chartered noted.

“We see some downside risk to near-term prices, but expect platinum to be trading back above $1,000/oz on a more sustained basis in H2,” the firm added.

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