CAPE TOWN (miningweekly.com) - The short-term prospects for platinum-group metals (PGMs) were positive with demand set to increase and metal prices remaining steady, says Tom Kendall, a strategist in the precious metals division of Mitsubishi Corporation.

The price of platinum was expected range between $1 380/oz and $1 720/oz this year, averaging at $1 565/oz.

The price of palladium was forecast to peak at $535/oz and average at $445/oz, Kendall said at the Mining Indaba, in Cape Town, on Monday.

Platinum demand was set to increase in 2010 on the back of a recovery in automotive sales and a further tightening of emissions standards.

While it was anticipated that the European automotive sector faced a tough year ahead as the commercial vehicle market had not bottomed out as yet, the US automotive industry was "back from the brink" and production and sales were expected to rebound this year.

Further, demand for commercial vehicles in China was growing significantly, with commercial vehicle sales up 45% year-on-year in 2009.

The Chinese demand for commercial vehicles could be explained by the rapid growth in automotive financing with consumers benefiting from a combination of trade-ins and lower tax rates.

The recovery of the automotive sector in the US and continued demand for commercial vehicles in China would sustain and increase the demand for platinum and palladium, said Kendall.

It was also expected that the implementation of the Euro III emissions standards in China this year would also have a positive influence on PGMs demand.

The outlook for the platinum jewellery sector, especially in China, was another factor that would further stimulate demand, said Kendall.

He said that China, which had a target market of 60-million young women, was still a long way from market saturation of platinum jewellery.

In 2009, it was reported that the value of platinum ounces purchased for the manufacture of jewellery in China totalled $2,25-billion.

Kendall said that another reason to feel optimistic about PGMs was the increased ease of investing in the metals, particularly through low-cost exposure with exchange-traded funds.