The short-term prospects for platinum-group metals (PGMs) are 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 is expected range between $1 380/oz and $1 720/oz this year, averaging at $1 565/oz.

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

Platinum demand is set to increase in 2010 on the back of a recovery in auto- motive sales and a further tightening of emissions standards.

While it is expected that the European automotive sector will face a tough year ahead as the commercial vehicle market has not bottomed out yet, the US automotive industry is “back from the brink” and production and sales are expected to rebound this year.

Further, demand for commercial vehicles in China is 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 will sustain and increase the demand for platinum and palladium, says Kendall.

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

The outlook for the platinum jewellery sector, especially in China, is another factor that will further stimulate demand, says Kendall.

He says that China, which has a target market of 60-million young women, is still a long way from market saturation of platinum jewellery.

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

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