Platinum-Palladium Survey Sees Convergence of Application and Price in Auto Catalyst Industry

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Researched by Industrialinfo.com (Industrial Information Resources; Incorporated; Houston, Texas). Tightening environmental requirements in some countries, strong production of diesel powered vehicles in Europe, and the retrofitting program in Japan for diesel filters on existing vehicles saw an 8% increase in platinum offtake in the vehicle emission control sector in 2002 - 2003, according to the GFMS inaugural Platinum and Palladium Survey 2004 presented in London and Johannesburg during the first week of May.

Although, palladium usage continued to drop as result of technological changes in response to the metal's price spike in 2000 - 2001, this trend is being mitigated to some extent as auto companies respond to platinum's massive relative price premium over palladium. There is a renewed determination among auto companies to develop flexibility over their comparative usage of the two metals as a result of the relative price movements which have shown a maximum swing between the two metals of $1,137 since January 2001.

GFMS forecast that the prevailing price differential between platinum and palladium will narrow and the consumers, notably in auto emission control catalysts, will be focusing on the similarity in the two metals' physical and chemical characteristics and partial interchangeability.

A combination of increasingly stringent legislation and engineering developments continues to drive the use of platinum group (PG) metals in emission control catalysts. The former calls for higher loading of metals and the latter works to minimize their use. In North America, palladium loading in particular has been reduced substantially resulting in falling consumption. Global net offtake was down in 2003 by almost 4%, but the rate of reduction is flattening out.

The emission control sector accounted for almost 42% of net global platinum offtake in 2003 and for almost 65% of palladium offtake. Europe remained the largest platinum consumer in the sector as a result of the market penetration of diesel-engine vehicles. Almost 45% of European manufactured catalyst-bearing vehicles were diesel powered and existing autocatalysts for diesel vehicles are loaded only with platinum.

There is a change in North American attitudes towards diesel vehicles, the survey noted, but said that the appropriate circumstances are not yet in place for a notable increase in diesel market share in the region. North American diesel market penetration is only 4% and a mere 25% of this is for passenger vehicles (1% of the total).

Asia, Latin America and India are adopting European, North American, or Japanese legislative standards and the rapid spread of autoctalyst use will ensure that, despite thrifting, autocatalysts will remain the lynchpin of demand in the PG metals' markets.

The number of scrapped exhaust systems continued to rise in 2003. The rate of the growth of palladium recovery was 19% against 5% rise in platinum, reflecting that the platinum:palladium loading ratio across the global vehicle fleet (total global auto production 2003, about 53 million vehicles) has been coming down and that exhausts are now being returned with a higher relative platinum content than before. Since 1999 there has been a 74% increase in demand for emission control catalysts.