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Understanding Platinum Group Metals and Gold Price Dynamics on the London Metals Exchange

This lecture explores the pricing mechanisms of Platinum Group Metals (PGMs) and Gold on the London Metals Exchange. Prices fluctuate daily, driven by the balance of supply and demand. While gold prices vary less due to lower industrial demand, any new demand for PGMs, such as in fuel cells or autocatalysts, can lead to significant price increases. The rarity of certain metals, like Rhodium and Ruthenium, and changing market dynamics due to industrial use over jewelry impact pricing strategies. This discussion also highlights the critical management of supply and demand in the PGM sector.

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Understanding Platinum Group Metals and Gold Price Dynamics on the London Metals Exchange

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Presentation Transcript

  1. CHEM 2017 2008lecture 9 + 10 PLATINUM GROUP METALS GOLD

  2. PGM prices fixed on London Metals Exchange • Prices change daily • Supply and demand balance determines price • $ pricing

  3. Supply and demand in close correspondence • Note for Au price fluctuations are much lower [industrial demand relatively low] • Any new demand for PGMs will cause large price increases • If price is too high users will seek alternative materials

  4. New demands – fuel cells [PGMs in the electrodes] • Increasing demand for autocatalysts • New mining operations – lead times of several years

  5. AUTOCATALYSTS • CO  CO2 Pd, Pt • HC  CO2 + H2O Pt, Pd • NO  N2 Rh

  6. In 2000 Ford Motor Co. switched to Pd only autocatalysts because Pt price was too high • Resulted in a very high price surge for Pd • Ford switched back to Pt+Pd catalysts • Pd price fell

  7. Rh relatively rare • Essential in autocatalysts for NO removal • Persistent high price

  8. Ru also relatively rare but demand limited • New uses found and price increases • Management of supply and demand in PGM business is critical

  9. Autocatalyst + industrial now outstripping jewellery demands • Good for prices [Jewellery fashion might change suddenly] • Case of gold?

  10. Gold more abundant than PGMs • Weak industrial demand historically • More marketing and technology research in last 7-8 years to help underpin price • New Au chemistry being developed

  11. PGMs

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