Citi Investment Research said it downgraded its price forecasts for platinum, palladium and rhodium, citing a lacklustre outlook for car demand, particularly in Europe, and a stronger dollar versus the euro.
The bank said it cut its platinum price forecast for this year by 17% to US$1,668/oz and for 2009 by 27% to US$1,308.
It also reduced its 2008 palladium forecast to US$365/oz, down 17% from its previous forecast, and its 2009 price outlook by 14% to US$300.
"Platinum group metal prices have fallen by 43%-55% since the beginning of July and by 47%-58% since the metals peaks in the first half of 2008, Citi said in a note to clients.
"We believe this reversal represents the impact of a weaker European economy, a depreciating euro and deteriorating vehicle sales (particularly in Europe), which supports our view that metal markets could move to balance near term."
Citi said, however, that it saw the metals` recent correction as overdone, and expect prices to move higher in the short term.
The bank also revised down its forecast for rhodium, cutting its 2008 forecast by 20% to US$7,195/oz and its 2009 price outlook by just over a third to US$4,500/oz.
All three metals have seen sharp price declines in recent weeks as investors fret over the outlook for car demand as the global economy falters. The PGMs are all used extensively in the manufacture of autocatalysts.
By 0853 GMT on Monday spot platinum was trading at US$1,186.00/US$1,206.00, up from US$1,134.50 at the nominal New York close on Friday but well off the record high of US$2,290 it reached in March.
Meanwhile palladium was at US$244.00/US$252.00, up more than 5% from the previous session.
Rhodium was trading at around US$4,325/oz on Monday, well off the highs of US$10,500/oz it hit earlier this year. – Mining Journal