Platinum Heads for Biggest Weekly Decline in at Least 21 Years

By Marianne Stigset

Oct. 3 (Bloomberg) -- Platinum headed for its biggest weekly drop in at least 21 years in London as a plunge in U.S. auto sales sapped demand for the metal used in autocatalysts. Gold and silver advanced as the dollar weakened against the euro.

U.S. September car sales were the worst since 1991, with Ford Motor Co.'s sales falling 35 percent. Autocatalysts, used to reduce tailpipe emissions, account for 47 percent of platinum demand, according to Johnson Matthey Plc. The figures take into account recycling.

``There's been large concerns over sales in the auto industry since August, and we've also seen changes in people's attitude towards driving,'' said Rory McVeigh, a senior platinum trader at Commerzbank AG in Luxembourg.

Platinum for immediate delivery fell $15, or 1.5 percent, to $959.50 an ounce as of 1:13 p.m. in London. The precious metal has plunged 15 percent in a week, the steepest drop since at least 1987. Platinum for August delivery dropped as much as 5 percent on the Tokyo Commodity Exchange.

China's passenger car sales fell 6.2 percent in August, the first decline in more than three years. Sales may fall short of a forecast 10 million this year as slowing economic growth and a slumping stock market undermine consumers' purchasing power, according to the China Association of Automobile Manufacturers.

Platinum fell to $962 an ounce in the morning ``fixing'' in London from $995 at the previous afternoon fixing. Palladium declined to $203.00 an ounce, from $205.00.

Slower Growth

Commodities, as measured by the Reuters/Jefferies CRB Index of 19 raw materials, have tumbled 9.9 percent this week. Manufacturing declined to a 7-year low in the U.S. and contracted at the fastest pace in 16 years in the U.K. last month. Initial jobless claims rose to the highest since 2001, the U.S. Labor Department said yesterday.

``Markets seem to be pricing in a much slower growth forecast for the global economy,'' Hussein Allidina, a commodity research analyst at Morgan Stanley, said in an e-mail today.

Platinum will move from a deficit to the largest surplus in 10 years as demand declines, Paul Walker, chief executive officer of London-based researcher GFMS Ltd., said this week.

Gold for immediate delivery rose $2.6, or 3.2 percent, to $839.58 an ounce in London. Futures for December fell $1.50, or 0.2 percent, to $842.80 in electronic trading on the Comex division of the New York Mercantile Exchange.

`Under Pressure'

``Against the backdrop of the slowdown in real economic activity globally, commodities will stay under pressure,'' Walter de Wet, head of commodities research at Standard Bank Group Ltd. in Johannesburg, said in a report. ``These conditions would favor the U.S. dollar and, because of little liquidity, gold could battle to rise much higher.''

Gold fell to $842.5 an ounce in the morning fixing in London, used by some mining companies to sell production, from $852 at the previous afternoon fixing.

Among other metals for immediate delivery, silver climbed 36.51 cents, or 3.4 percent, to $11.21 an ounce and palladium gained $5.50, or 2.8 percent, to $201 an ounce.

To contact the reporter on this story: Marianne Stigset in Oslo at mstigset@bloomberg.net