Platinum Futures Decline as Oil Plunge Signals Drop in Demand

By Dave McCombs

July 9 (Bloomberg) -- Platinum futures in Tokyo fell for a fourth time in five days as a plunge in crude oil signaled that a global commodities rally has pushed prices high enough to stifle economic growth and demand for metals and other materials.

Platinum for immediate delivery has dropped 15 percent from the record $2301.50 an ounce set on March 4 on signs of declining demand for the metal in vehicle emissions control systems and as a haven against inflation.

``Auto sales in Japan, U.S. and Europe have decreased, and so has demand for platinum,'' Kazuhiko Saito, a commodity strategist at Interes Capital Management, said today in Tokyo by telephone. ``The Tokyo platinum market will continue to decline as there's no fresh bull fundamentals.''

Platinum for June delivery in Tokyo dropped 91 yen, or 1.3 percent, to 6,679 yen a gram ($1,933 an ounce) at the 11 a.m. break on the Tokyo Commodity Exchange.

The most-active contract may drop to as low as 6,500 yen a gram this week, Saito said.

Metal for immediate delivery was little changed at $1,953.50 an ounce, at 12:05 p.m. in Tokyo, 0.1 percent higher than yesterday in New York.

Crude oil traded near $136 a barrel in Asia after falling the most in three months yesterday amid lingering concern that U.S. home prices may drop further, damping consumer confidence.

An index of pending U.S. home resales fell 4.7 percent in May following a revised 7.1 percent gain in April that was greater than previously reported, the National Association of Realtors said. The prospect of further price declines may be discouraging offers, while rising mortgage rates and tougher lending standards make it harder to qualify for loans.

More than half of platinum demand is from makers of emissions-control components for car and truck exhaust systems. U.S. auto sales fell last month to the lowest annual rate since 1993, as consumers shunned bigger vehicles and retailers ran short of smaller ones.

To contact the reporter for this story: Dave McCombs in Tokyo at dmccombs@bloomberg.net