Platinum, palladium futures dive with China car sales

Platinum and palladium futures in Tokyo plunged by the exchange-imposed daily limits after passenger car sales in China fell for the first time in three years, undermining demand for the metals' use in exhaust filters.

Platinum has dropped 44 percent in Tokyo from the record in March as widening losses in U.S. credit investments sapped economic growth and demand for metals. Sales of passenger vehicles declined in August, the China Association of Automobile Manufacturers said in an e-mailed statement yesterday.

"I'm very bearish over the next two weeks because China's auto sales are kind of sluggish and the credit crisis is keeping people away from all risk assets, including precious metals,'' Wakako Harada, a trader at Mitsubishi Corp. in Tokyo, said today by phone. "Investors are waiting for further declines, even though orders from physical buyers are steady at these levels.''

Platinum for August delivery sank the limit of 300 yen, or 6.8 percent, to close at 4,144 yen a gram ($1,199 an ounce) on the Tokyo Commodity Exchange, the lowest since Dec. 19, 2006.

August-delivery palladium dropped the daily 100 yen limit to 780 yen a gram, the lowest since Oct. 25, 2005, before closing at 790 yen a gram.

Lehman Brothers Holdings Inc. shares plunged by a record 45 percent yesterday in New York. The decline drove speculation a widening credit crisis may force some investors to sell precious metals to raise cash, Harada said.

"We're coming up to the end of the third quarter this month and the Lehman news makes people think hedge funds will probably be facing more redemptions and need to sell whatever they can,'' she said.

Aquarius Platinum Ltd., which produces the metal in South Africa and Zimbabwe, had its biggest decline in more than 8 years in Sydney trading. The Hamilton, Bermuda-based company's shares plunged 12 percent, its biggest drop since April 17, 2000, to close at A$8.12 on the Australian stock exchange.