Platinum price: VW taketh away, Toyota giveth

October 17, 2015

New York (Oct 17)  On Friday, platinum futures built on a rally kicked off at the start of the month as investors who saw a bargain following the metal's slide after dieselgate, received further incentives to stock up on the metal from the Toyota car company.

In afternoon trade on the Nymex in New York platinum for delivery in January – the most active contract – added $14 or 1.4% to $1,021 an ounce consolidating recent gains. Yesterday platinum scaled $1,000 for the first time in six weeks and is now up 14% from a seven year low of $893 struck at the beginning of October.

Platinum price up 14% in two weeks gets further boost as Toyota unveils big push into fuel cell cars where PGM loadings are typically 7 times higher

Platinum's primary use is in catalytic converters to reduce emissions particularly in diesel vehicles. The Volkswagen scandal was seen as denting the metal's short and longer term outlook given Europe's car manufacturers are the top consumers where diesel makes up 50% of the market.

 Toyota, which is sure to retake the top spot from Volkswagen as the world's largest automaker, this week announced an ambitious plan to transform its product line over the coming decades

The Japanese giant wants to all but eliminate conventional gasoline vehicles from its product line by 2050 and reduce its vehicles' emissions to 90% below 2010 levels.

Toyota is eschewing battery powered electric vehicles and is betting big on hyrogen fuel cell technology (which helps explain why Elon Musk calls fuel cell cars "extremely silly")

Toyota launched its first mass-produced fuel cell car – the Mirai or "future" in Japanese – for the European market in Volkswagen's back yard on Thursday. Toyota also has the backing of the Japanese government for its push into hydrogen.

In Japan the government will give you $25,000 – nearly half the total cost – if you buy a fuel cell vehicle. The country also has a program to install hydrogen fuel cells into 10% or 5.3m Japanese households to replace grid electricity by 2030.

The hydrogen society is probably further into the future than its promoters want you to believe but it’s impact on platinum could be enormous.

There’s a simple reason – today's fuel cell cars need a full ounce of platinum versus a 2 – 4 grams PGM loading for your average gasoline (primarily palladium) or diesel vehicle.

Given fuel cell cars' still hefty price tag, Toyota is spending billions on research to reduce that requirement. But even if they manage to cut it in half we are looking at 12-15 grams per vehicle.


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