Platinum Futures in Tokyo Post Worst Week in at Least 19 Years

By Dave McCombs

Sept. 12 (Bloomberg) -- Platinum futures in Tokyo had the biggest weekly decline since at least 1989 as the dollar climbed against the euro and oil fell to a five-month low, slashing demand for precious metals as alternative investments.

The metal plunged by the exchange-imposed limit in Tokyo for two days this week. Palladium, also used in car exhaust filters, plummeted to a three-year low on a stronger dollar and mounting evidence that slumping U.S. auto sales aren't recovering.

``I'm just amazed at how far and how fast some of these commodities have dropped: platinum, palladium, oil, gold,'' Jonathan Barratt, managing director of Commodity Broking Services in Sydney, said today by telephone. ``Dollar appreciation just devastated those markets.''

Platinum for August delivery dropped 13.2 percent this week, closing at 4,003 yen a gram ($1,158 an ounce) today on the Tokyo Commodity Exchange. The most-active contract yesterday fell to 3,844 yen, the lowest since March 13, 2006.

August-delivery palladium dropped 10.4 percent this week to 849 yen a gram, after dropping yesterday to 760 yen, the lowest since Oct. 14, 2005. The most-traded contract is down 59 percent from the record 2,076 yen a gram set March 4.

``I'm shocked at the declines,'' Yuichi Ikemizu, head of commodity trading at Standard Bank Plc in Tokyo, said in an interview yesterday, the second day in a row platinum futures fell by the 300 yen daily limit. ``It should have stopped falling and, it has to stop somewhere, but for now, there is no bottom.''

Gold Decline

Gold futures in New York yesterday fell below $750 an ounce, marking the longest slump in eight years, as the dollar surged to a one-year high against the euro. Silver sank to the lowest since June 2006 and the Reuters/Jefferies CRB Index of 19 raw materials dropped to the lowest since Jan. 24.

Palladium and platinum were the second- and third-worst performers on the Rogers International Commodities Index after silver this month as U.S. automakers reported mounting losses and vehicle sales in China fell for the first time in three years.

Ford Motor Co. and bigger rival General Motors Corp. lost $24.1 billion in the second quarter as consumers, faced with record gasoline prices, shunned the light trucks that provide most of the companies' sales. Total U.S. auto sales may drop to a 15-year low this year and fall even more in 2009, analysts said.

Passenger car sales in China dropped last month, the China Association of Automobile Manufacturers said Sept. 9.

Global carmakers account for about 60 percent of platinum consumption, according to Johnson Matthey Plc, which makes about a third of the world's auto catalysts.

``The bottom does feel close'' for platinum, John Reade, an analyst at UBS AG, said in a note to clients dated today. ``But we'll probably need to hear some positive news from the auto sector to bring fundamental support.''

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