One more for jeweler Daniel INRE the PGMs. And this is from the transcript of Stillwater Mining Company’s 4th quarter earnings for 2008, by Frank McAllister, Chairman and CEO of Stillwater Mining.

Now the company’s most important end market of course is sales for catalytic converters used primarily in new cars and trucks. Ford and General Motors are our two largest customers and between them they take 100% of our mined production of Palladium and 70% of our mined platinum. Despite the industry downturn, we have continued to deliver to both companies according to the terms of the respective contracts. While lower prices in these contracts have guaranteed us a minimum selling price for our mined Palladium, that in 2009 will average $364 per ounce, an important benefit to us when palladium’s price is hovering around $200 per ounce today.

~~~

Of course, these automotive contracts with their favorable pricing provisions will not last forever. The larger of the two contracts is slated to expire at the end of 2010 and the other runs out at the end of 2012, [Mata Musing: that's the GM contract we are discussing here...] and absent their renewal we still should have markets for production as platinum and palladium are traded – they are traded freely on the terminal markets, but in the present pricing environment, the likelihood of obtaining comparable floor prices in any new PGM supply contract is probably low.

Moreover, in view of the current financial conditions of the automotive companies, we have faced the continuum of this, but one or both of these critical customers could file for bankruptcy and along with that walk away from our existing agreements prior to their expiration. Having essentially stabilized our cash position in the current environment, we are now acutely focused on the steps we will need to take to remain competitive and viable once the floor prices in the automotive contracts are gone.

It is obvious that a great portion of Stillwater’s business is bolstered by the GM contracts.

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Catherine, I did have some side bar info INRE the incestuous relationship between Rattner, Chrysler’s Cerebius and Quadrangle back in my Mar 31st post on the fate of the auto manufacturers. This added stuff was courtesy of a comment originally by Missy.

I did not, and will not pursue Rattner’s investigative status for a single, and very prime reason… consistency. I do not sanction those spreading rumours and speculation about Palin and fantasy/manufactured FBI investigations, and I will hold that consistency for Rattner as well. If he comes under investigation, I will wade into those waters (and latest reports from Mayor Bloomberg say it’s not likely he’ll be investigated, but doesn’t eliminate possible civil suits).

So Rattner has not been named as as subject yet, and apparently is not returning to Quadrangle post O’admin duties. Apparently, Stillwater’s status is not the only fallout he is avoiding.

His official reasons are what they are. But if I were to bank on a more sure bet as to the reason for his beating feet, and leaving it in the hands of a former USW employee, I’d say GM-Stillwater and the stink this can and will raise (once the media learns to multitask…) is sufficient enough. He doesn’t have to publicly undo what he wrought in the restructuring back rooms, and the pressure of dealing with the mining job loss falls on his successor.

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Missy, you are absolutely correct about Mata and larry. As we have learned, letting disinformation stand can be damaging. I do forget that somethimes. Thank you for the reminder.

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Why do you think he quit?
How much was he paid?
and these car companys have now over 100 billion in Taxpayer money.
kcanova
your cartoon is great.

http://www.foxnews.com/politics/2009/07/14/auto-czar-leaves-washington-cloud-pay-play-investigation/
Auto Czar Leaves Washington Amidst Pay-to-Play Probe Involving Former Firm
The White House stood by Steven Rattner back in April when reports surfaced that he was tied to a deal being investigated by the Securities and Exchange Commission and New York Attorney General Andrew Cuomo. But his departure as auto czar is raising questions about the course of the investigation.
July 14, 2009

snip

The peculiar timing of Steven Rattner’s departure as White House car czar has raised questions about the course of an investigation that has scrutinized his possible dealings with the New York state pension fund.

snip

Though the task force couldn’t prevent GM and Chrysler — which have received about $80 billion in taxpayer cash

[yet they shut over 700 car dealers who did not support democrats]

today they are talking again about pushing the health rip off through on the back pages they plan to fine people who refuse to buy health insurance they think they will raise 34 billion in these fines?

Don’t give up the fight never give in or up.

Catherine

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I forgot to add, Daniel… I know the main thrust of your interest in the PGMs is jewelry, via your blog. But unless there is an alternative to use of either platinum or palladium in hydrogen cells, increased development of this technology also lends to increasing demand.

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Thank you for your contribution, Daniel. I do agree that the demand for platinum and palladium has been down globally for all aspects of it’s useage – i.e. dental alloys, jewelry, and catalytic converters just to name some – due to the declining demand and the world’s economic status. All this was in the Platinum 2009 Market Review.

Global platinum demand fell by 5.0 per cent to 6.35 million ounces in 2008, according to Johnson Matthey in “PLATINUM 2009″, released today. Autocatalyst demand suffered due to a slowdown in North American and European vehicle production. Industrial demand was also affected by the growing weakness in the world economy and declined slightly. However, a fall in the price of platinum revived demand from the jewellery and physical investment sectors in the second half of the year. Supplies of platinum fell by 9.5 per cent to 5.97 million ounces last year mainly due to a difficult operating environment in South Africa. Overall, the platinum market was in deficit by 375,000 oz.

It was noted that it was the first time that the auto industry demand declined since 1999.

Also in that same review, they noted that the supply in the South African mines were declining simultaneously due to interruptions to electricity supply, bad weather, safety closures, smelter shutdowns and shortages of skilled staff. Due to base supply/demand economics, less supply will affect pricing…. and the demand for PGMs for various uses has not dried up.

They also noted that palladium demand was on the increase, but the supply declining… despite economic problems…. still drove the price up.

And you will note in my first post on Stillwater and the GM contract, I addressed facts that Stillwater was owned by Russia’s Norilsk.

None of this changes the reality that, in a declining demand, the GM contract becomes even more important for the American PGM industry. Nor does Norilsk’s majority ownership… which they’ve been trying to sell since last October (in the first linked post)… negate the reality that the miners and refining facilities all employ US workers.

INRE the demand for platimum/palladium, the palladium demand is projected to rise in China, Europe and America for jewelry.

According to a report by Platinum 2008 Interim Review written by David Jollie and published by Johnson Matthey, palladium demand is expected to rise to 780000 oz in 2008, reversing two years of decline.

Global demand for palladium from the jewellery sector is expected to reflect an increase of 55000 oz to 780000 oz. Demand in China is set to rise to 550000 oz.

Most of the unsold original stock of 95% purity has now been reprocessed and recycling rates are declining. While the first half of the year saw weak purchasing of palladium by jewellery manufacturers, the fall in the metal price in the third quarter of 2008 rekindled this market.

Interest in palladium jewellery has continued to grow in Europe and North America where pro-duct availability has improved, driving combined demand to 125 000 oz.

Yearly Chinese jewellery demand is expected to reflect an increase of 10%, to a total of 550 000 oz, in 2008.

Palladium demand from jewellery manufacturers was relatively weak in the first half of 2008. The palladium price reached a six-year high and encouraged the industry to reduce working stocks of metal.

Additionally, MarketWatch wrote that platinum has gained 60% from it’s lows last October, coincidently about the same time Norilsk announced it’s desire to sell. And both platinum and palladium prices are on the rise.

Finally, the North American Palladium group believes that the increased fuel regulations play a significant role in the future demand of palladium. I can’t argue this one.

All this still translates to the reality that the US mines need workers to harvest the rare resource (since it’s only one of three nations that produce the PGMs). And the GM contract – with a private party agreement for subsidizing – being cancelled affects the stability of that operation.

So I have to wonder, are you suggesting that the J-R Reef resources are expendable as a world market?

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Unfortunately the writer has some facts desperately wrong. The palladium market, like platinum, gold and silver is a world market-The price is the same globally. Of course it would cost to ship palladium from off shore. Keep in mind Norilsk ( The Russian mining consortium) has a major ownership in Stillwater. Stillwater has been hurt by a double whammy- Cheap palladium (in the $200-$250 range) and plummeting demand. Despite great efforts to promote thnis platinum family metal for 950palladium jewelry, demand is slack.

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So some 50 years ago the folks in the Extension Department of Harding College got it, and Predicts the Future 50 Years Ago This is Amazing Insight in a cartoon.

http://www.youtube.com/watch?v=UIUa4GblVJg

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@Missy:

I agree, Missy, with your assessment of FA, which is probably why I spend more time here than anywhere else. I like the crew, and most of the posters, even a number of them who I might not seem to from my comments.

Also, thanks for your compliment. You can’t see, but I’m blushing. In fact, I feel I have to appologize for those times when I’m not up to speed, and a bit too overbearing. And that’s another reason I like the folks here. They are pretty level headed, which helps me keep my focus, as well.

Glad you are a member, too.

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@yonason:

Oh, and yes, I too am puzzled by Matta’s seeming obsession to rebut the dullards. Maybe she’s just bored and is using their drivel as a backdrop to her sanity? Works for me.

I appreciate the time Mata takes to “rebut the dullards.” It isn’t just FA regulars that are reading these threads, newbies, lurkers, etc., she’s right to not let some of the comments stand. After lurking for quite some time, I finally got the courage to become a newbie, Chris G was so gracious in his response to my first post, never will forget that or the kind words by our other hosts. This has been a great spot to land.

I also *very much* appreciate your informative posts, attitude and sense of humor. There are so many great minds contributing to this blog. My future doesn’t looks so dim when I know you guys will always be here when I’m stuck in my house.

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