The price of platinum hit a 23-year high earlier this year and this could prompt an upswing in the demand for palladium by the automotive catalytic converter market.

The price of platinum hit a 23-year high earlier this year and this could prompt an upswing in the demand for palladium by the automotive catalytic converter market.

Speaking at the recent Investing in African Mining Conference, the chairman of Anglo Platinum, Barry Davison, said the auto catalyst would be a vital long-term market for the palladium.

"Electronic demand for palladium has halved since its peak in 2000, because of the volatility in price and the often erratic supplies," Davison said.

According to a report in , the total market for palladium in 1988 was 3,4 million ounces. The electronics sector consumed 1,7 million ounces that year, the dental sector one million and other applications about 400 000. Auto catalysts used only 235 000 ounces in 1988.

But by the end of the last decade, automotive manufacturers were buying about 90 per cent of the newly-mined palladium for application in catalytic converter exhaust systems.

But when market prices hit a peak in 2000, auto catalyst makers converted the bulk of their automotive catalyst output to favour platinum.

But with the hike in the price of platinum, palladium could make a strong comeback, precious metal analysts say.

Davison said if the upswing in palladium sales was to happen, stability in its price and supply would be crucial. “In the next few years SA palladium output will increase as companies increase platinum production and the palladium that goes with it,” he said.