Platinum Futures Gain as Stock Rally Eases Auto-Demand Concern

By Dave McCombs

July 17 (Bloomberg) -- Platinum futures in Tokyo rose from a 10-week low as gains in U.S. and Asian equity markets eased concern that global demand for cars and the metal used in their emission control systems may plunge.

Futures gained for the first time in four days as the benchmark MSCI Asia-Pacific Index rose from a 21-month low. Platinum's gains today also prompted some traders to buy out of bets on the metal's decline, said Kazuhiko Saito, a strategist at Interes Capital Management.

``Platinum futures were oversold, so today traders are short covering,'' Saito said today by phone in Tokyo. ``The bear trend will continue next week because there is still no sign of good news for auto demand.''

Platinum for June delivery, the most active contract, gained 15 yen, or 0.2 percent, to 6,430 yen a gram ($1,906 an ounce) at the 11 a.m. break on the Tokyo Commodity Exchange. It plunged by the 300-yen exchange-imposed daily limit yesterday to 6,415 yen a gram, the lowest since May 8.

Metal for immediate delivery today gained $9.50 to $1,938.50 an ounce, 0.5 percent higher than yesterday in New York.

Platinum may drop below $1,900 next week, Interes Capital's Saito said, as investors shift funds to gold and grains.

Car and light-truck manufacturers worldwide account for more than 60 percent of platinum demand, according to estimates by Johnson Matthey Plc, which makes about one-third of the world's auto catalysts.

The MSCI Asia-Pacific Index added 1.5 percent to 131.36 at 10:22 a.m. Tokyo time, halting a three-day, 3.1 percent slump. The benchmark, which dropped yesterday to its lowest since October 2006, has lost 17 percent this year.

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