The Auto industry has finally had some good news with some stunning figures for Chinese car sales – up over 40% YoY. Inventories in most Western markets are now back to normal (aided by Government funded scrapping schemes), a lot of US capacity has been permanently shut down, and the likes of BMW have actually had to increase production levels to meet demand.
While we remain agnostic about the valuations of most of the listed players, this is clearly good news for the component industry. In particular it is good news for Platinum, which we have been keen on since the price plunged on inventory liquidation last year. Car sales will move up gently, but production will rise sharply as some temporarily mothballed plants re-open. Inventories are non-existent, and most mines are still loss making meaning supply will not react quickly. A US-traded ETF is also in prospect, and if it acquires anything like the market share that its Gold focussed cousin did, the price moves could be spectacular. Still our favourite commodity…
