Asian platinum 24-year high, crimps physical buying

Spot platinum prices hit a fresh 24-year high in Asia on Wednesday on renewed speculative buying but physical demand, especially from key buyer China, showed signs of retreating, traders said on Wednesday.
"There's no demand at all. Not from China," said one dealer in Hong Kong, where premiums to London physical prices were flat at $1.50 to $2.50 an ounce.
Japanese speculators chased platinum to a high of $924 an ounce before letting it ease to $920/925 an ounce. The metal, used in jewellery and in auto catalytic converters, was last quoted at $909/914 an ounce in New York.
The rising prices scared off buyers. Some dealers said the absence of physical buying would make platinum prone to a correction that had this week dragged down the precious metal to $885 an ounce.
"Platinum came under pressure on the view that Chinese buyers may scale back their purchases of platinum following recent steep price rises," a senior trader at a Japanese trading house said.
"But the market was really careful about overselling platinum, considering the belief that there won't be any major selling from suppliers," the trader said.
China's strong appetite for industrial metal was a supporting factor in the platinum market this year, in addition to worries about output cuts in key suppliers South Africa and Russia and the prospect of tougher emission restrictions, traders said.
But some dealers were against pinning too many hopes on China, because rising prices had encouraged jewellery consumers to shift to white gold.
China accounted for 18 percent of global platinum demand in 2003. "Demand will not increase so much in China or Japan," said Yukuji Sonoda, a precious metals analyst at Daiichi Commodities in Tokyo.
"In Japan, jewellery demand will be 20 tonnes this year compared with 22 or 25 last year. For China, the maximum amount may be 40 tonnes compared with 42 or 45 last year," he said.
"European commentators said prices could reach over $1,000. Maybe it's possible, but I can't guarantee that," he said. Japanese dealers said prices had been supported by the prospect of strong demand, even though there had been no clear evidence of major physical purchasing of the metal.
But they said physical buying was also important in seeing key TOCOM yen-based platinum futures retest the 16-1/2-year high of 3,108 yen reached on March 11, and seeing the dollar-denominated spot price break through $1,000 an ounce.