The platinum price soared above US$700/oz last year, to the dismay of platinum consumers and producers alike.
When the price spikes like that it can do a lot of damage to the two pillars of the business.
These are jewellery makers and the automobile manufacturers that use platinum - and other platinum group metals such as palladium and rhodium - in the autocatalysts required to clean up vehicle emissions.
Final statistics for last year are not yet out but, according to metals trading and research firm Johnson Matthey, jewellery demand at an estimated 2,55m oz accounted for 41% of platinum demand of 6,19m oz in 2002.
The most important consumer of platinum jewellery is China, which took up a record estimated 1,47m oz of platinum last year. But Chinese demand for the metal is sensitive to price and to price volatility.
On the autocatalyst side the great worry is that a soaring platinum price will encourage car manufacturers to search for a cheaper alternative to do the same job. So far, there is no real sign of one, but industry marketing executives are far happier with a price around $600/oz than $700.
They know the automobile industry can afford $600/oz and the SA platinum companies made good profits at that level.
AngloPlat's gross profit margin in 2002 was 46,5% on an average platinum price of $544/oz.
Part of the reason for the platinum price spike was a shift by car manufacturers away from palladium into platinum for making autocatalyst because of problems with palladium supply from Russia. In May, though, GM announced it would start using the cheaper palladium again.
Johnson Matthey says the outlook is good, with demand for platinum forecast to rise to a new high of 6,37m oz in 2002 (2001: 6,19m oz).
That will not be matched by growth in mine production, which is estimated to rise only marginally to 5,88m oz (2001: 5,85m oz). After taking into account various other factors, Johnson Matthey says the market was in deficit by 490 000 oz (340 000 oz) last year, meaning this shortfall had to be met from existing stocks.
Jewellery demand is expected to continue growing, primarily because of booming consumption from China, and autocatalyst demand remains firm despite worries over the vehicle markets in Europe and North America.
That is because of the growth in demand for diesel engines, which use platinum in autocatalyst , and because tightening of emission controls means more platinum has to be used .
Falling vehicle production in developed economies is being offset by growing demand for cars elsewhere.
