TORONTO (miningweekly.com) - The difference between the prices for platinum and palladium will likely continue to decrease, Stillwater Mining CEO Frank McAllister said on Thursday.

Both metals are used primarily in emissions-reducing autocatalysts, but platinum is currently trading at above $1 500/oz, while palladium is valued at $421/oz.

McAllister told analysts and investors that he has no expectations for parity between the two metals, but suggested palladium could potentially increase to half the price of platinum.

"That is going to become the riddle that will have to be solved by market analysts and spectators alike," he commented.

"I don't expect there to be parity between the two prices, but I do expect there to be a greater equilibrium than the one we have seen for the past 20 years."

The metals are becoming increasingly interchangeable in catalytic converter applications, as automakers have focused their research efforts on cheaper palladium.

In fact, for most of the catalytic converter market, there is little compelling product difference between platinum and palladium except price, McAllister commented.

However, South Africa's dominant position in the supply of platinum-group metals (PGMs) will ensure that platinum prices remain higher, he said.

This is because the market price for platinum, which accounts for most South African PGM production, will need to be high enough to incentivise miners in the country to bring on new capacity to meet global requirements for the metals.

Unlike South African producers, US-based Stillwater produces more palladium than platinum - at a ratio of about 3,3 to one - and so stands to benefit from increased use of palladium in autocatalysts and from firmer prices for the metal.

Stillwater operates two mines - Stillwater and East Boulder - in the Beartooth Mountains of south-central Montana, in the US.

The company reported a net loss of $6,2-million for the fourth quarter of 2009, compared with a $133,8-million net loss in the same period a year earlier.

Revenue for the period amounted to  $101,8-million, compared with $182-million a year ago.

The company's production in 2009 rose 6,2% year-on-year, to 529 900 oz of palladium and platinum.