Precious metal hit by rising output, weak growth in China and Volkswagen scandal
RUSTENBURG, South Africa—Miners at Impala Platinum Holdings Ltd.’s three-decade-old mine drill into a thin strip of sparkling platinum about 2,600 feet underground.
The sweat-soaked miners are producing large amounts of this precious metal, helping to dig a hole for a market in which prices are near a seven-year low.
During the commodities boom, platinum became more expensive than gold, buoyed by demand from Chinese jewelry buyers and the auto industry.
Now, those factors have turned against it, with China’s fraying economic growth and fallout from the Volkswagen AG emissions scandal threatening to curb demand at a time when supply remains strong.
The metal is widely used in diesel car engines, which are at the center of the VW scandal, sparking concerns that demand for diesel vehicles could decline and have an impact on platinum demand.
About 29% of total platinum demand comes from China, mainly in jewelry. About 43% of platinum is used in the auto industry for catalytic converters to reduce engine emissions.
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