Metals Shortage Could Disrupt Auto Parts

Severe shortages of palladium and platinum have led a top European auto parts maker to warn of potential shortages of catalytic converters and other products made with the precious metals.

Palladium has surged to a 17-year high and platinum has reached a seven-year high, largely because Russia hasn’t exported any since December, leaving stockpiles critically low. Traders also say some big investors have hoarded both metals.

On Friday, palladium rose $17.25 to $235 an ounce after reaching a 17-year high of $247, and platinum rose $27.40 to $479.

Degussa, one of Europe’s largest suppliers of products containing platinum and palladium, is warning car makers and other customers that there’s a danger of a disruption to supplies.

“We are starting to inform our customers there might be a problem with deliveries,” Degussa executive Ralf Drieselmann said. “If there was no physical metal available for about four weeks, we would have everyone affected, including the car companies.”

Russia, which usually supplies 70% of the world’s palladium and 25% of its platinum, hasn’t shipped either metal this year. The delays were caused by changes in the Russian government and the administration of precious-metals marketing, which prevented export licenses from being issued.

Japanese trading houses are currently holding talks in Tokyo with officials from Almaz, the Russian precious-metals export agency, about the timing and size of 1997 shipments. Platinum is mainly used in catalytic converters, a pollution-control device in automobiles, and in jewelry. Palladium is used for catalytic converters, by the electronics industry and in dental alloys.