Platinum, Palladium Prices Tumble on Concern Auto Sales to Slow

By Millie Munshi

Oct. 27 (Bloomberg) -- Platinum tumbled to a five-year low in New York on concern that a slowing global economy may reduce demand for the metal from automakers. Palladium also dropped.

The U.S. auto market may shrink this year to the smallest since 1993 as the credit crunch and a slowing economy curb sales. Carmakers use platinum for pollution-control devices and account for more than 60 percent of demand. Before today, the metal's price plunged 47 percent this year.

``The auto industry is in a decline right now,'' said Tetsuya Yoshii, vice president for derivative products at Mizuho Corporate Bank Ltd. in Tokyo. ``That will be a very bearish factor for platinum and palladium.''

Platinum futures for January delivery dropped $33.70, or 4.2 percent, to $768.60 an ounce at 9:38 a.m. on the New York Mercantile Exchange. Earlier, the price touched $752.10, the lowest for a most-active contract since Nov. 18, 2003.

Palladium futures for December delivery fell $3.95, or 2.3 percent, to $170 an ounce in New York. The metal sank 54 percent this year before today.

To contact the reporter on this story: Millie Munshi in New York at mmunshi@bloomberg.net.