The latest Chinese stock market sell-off is hurting commodities. Energy prices got hit the most with oil prices falling below $50/barrel, followed by precious metals. Gold prices hit a 5-year low, falling as much as 8% in July, silver of course, followed because metal price correlation is still an important factor to account for.
Platinum prices fell as much as 12% this month:
Graph: MetalMiner.
Despite most analysts predicting a deficit, this precious metal has done nothing but fall during the past few years. The metal is down 35% this year.
Production Up
One factor putting the market under pressure is South African production of platinum, which accounts for more than 70% of the world’s supply, which has returned to levels above those of the five-month strike in 2014.
Palladium prices fell as much as 14% this month:
Graph: MetalMiner.
Palladium was the best performer among precious metals until just about a year ago when it started to fall, too. The metal is down 32% this year with an impressive decline over the past two months.
Unlike platinum, palladium finds more application in gasoline engines and is, therefore, more exposed to the Chinese and US automotive markets than to European markets. The slow down of the Chinese automotive market over the past few months might help explain the sharp price decline.