Platinum Heads for Second Weekly Drop as Recession Curbs Demand

By Jae Hur

Nov. 21 (Bloomberg) -- Platinum headed for the second straight weekly drop as a recession in the U.S., Europe and Japan cuts global consumption of the metal used in jewelry and autocatalysts.

Asian stocks fell for the fifth day after oil plunged below $50 and U.S. unemployment claims approached a 26-year high as the global slowdown deepens. Honda Motor Co., the only major automaker to expand North American auto output so far this year, is trimming production plans at U.S. plants by 18,000 more vehicles as sales decline.

``Stocks and platinum are moving in the same direction,'' Shuji Sugata, research manager at Mitsubishi Corp. Futures & Securities Ltd. in Tokyo, said today by phone. ``People are closely watching the U.S.'s decision on automaker rescue plans.''

Immediate-delivery platinum lost as much as 1.1 percent to $769 an ounce, the lowest since Oct. 29, and was little changed at $778 at 11:16 a.m. Tokyo time. The metal has fallen 7.4 percent this week, extending last week's 1.6 percent loss.

Palladium for immediate delivery fell 2.4 percent to $176 an ounce. The price has plunged 19 percent this week.

Spot platinum prices have slumped 49 percent this year as sales at automakers, the biggest users of the metal, plummeted amid rising unemployment and tighter consumer lending. Platinum reached a record $2,301.50 an ounce in March.

Automakers account for more than 60 percent of global platinum consumption, according to estimates by Johnson Matthey Plc, a London-based metals refiner, trader and researcher.

The MSCI Asia Pacific Index fell 1.8 percent to 73.84, extending this week's decline to 11 percent and set for its lowest close since Aug. 19, 2003. U.S. stocks slid and the Standard & Poor's 500 Index plunged to its lowest level in 11 years after economic reports depicted a deepening recession and lawmakers postponed a vote on a plan to salvage the auto industry.

Crude oil for January delivery fell to as low as $48.25 a barrel, the lowest since May 23, 2005.

October-delivery platinum dropped as much as 6.3 percent to 2,294 yen a gram ($756 an ounce), the lowest since Oct. 27, on the Tokyo Commodity Exchange and was at 2,321 yen at the 11 a.m. local time break.

To contact the reporter on this story: Jae Hur in Singapore at jhur1@bloomberg.net