Platinum futures (PL) at CME Group are an integral part of the global metals market. With annual production totaling 5% of gold’s annual production and 1% of silver’s annual production, platinum is one of the rarest metals on earth. This extremely rare metal has a variety of uses in transportation and in the manufacture of jewelry and electronics.
Each NYMEX Platinum futures contract represents 50 troy ounces of deliverable platinum, with a minimum tick price of $5.00. The contract trades electronically nearly around the clock, six days a week, and traders are able to leverage substantial margin efficiencies when gaining exposure to this liquid market.
Production of platinum is highly concentrated, with South Africa and Russia producing 70% and 15% of the annual supply, respectively.
Consequently, the supply, and in turn the price, of platinum fluctuates with the political stability of these countries. The demand for platinum is primarily influenced by its industrial uses.
Catalytic converters, automotive devices that reduce pollution, account for 45% of platinum’s demand. As environmental regulations become more stringent, demand and use for platinum may rise.
Additionally, with its many uses in the technology sector, the metal may move in concert with the broader economy. Platinum’s price is particularly attuned to the strength or weakness of the Japanese economy: 30% of platinum is used for jewelry manufacturing and Japan demands 95% of this jewelry.
Traders looking to take a position in a rare metal that offers some exposure to the broad economy have a valuable tool in the platinum futures contract.