LBMA:Media coverage of diesel emissions irresponsible and irrelevant

In short few people at the LBMA meeting in Vienna had much, if anything, positive to say about the future for the platinum price.  That is apart from one who should perhaps have a better handle on it than most – Peter Duncan of pgm specialists Johnson Matthey.  Duncan did thus make some very pertinent comments on the hugely damaging recent media coverage of the diesel market.

Duncan described the media coverage of the diesel market in the wake of the VW emissions testing manipulation scandal as both irresponsible reporting and irrelevant in terms of the ongoing demand for diesel.  Diesel – and thus the principal market for platinum catalysts - should not be demonised, he said, as diesel technology provides the single most important route towards reducing global CO2 emissions targets and it is going to be imperative for manufacturers to produce and sell diesel engine vehicles to meet overall emissions standards which will result in potentially enormous fines if they can’t meet statutory greenhouse gas emissions targets.

Indeed the NOx emission differences between diesel and gasoline (petrol) engined light vehicles are already very small under Euro 6b forthcoming legislation and although much of the press coverage of diesels has played on the differences between emissions under test conditions and those under real driving conditions, this has been known about for some time and will be fully addressed under the forthcoming standards.  Indeed gasoline engines may effectively become the bigger polluters given their particulate emissions will be allowed to be higher than for diesel under new legislation.

Of course perception by the automobile buying public that diesel is bad (despite the new controls meaning that they will at least be little or no worse even on NOx emissions than petrol engines and better on CO2 and particulates) could have a short term impact, but one suspects this may fall away over time as the industry makes its case for diesel rather more vigorously to try and retain the market share.

In other aspects of the market, Duncan sees growth in the demand as emission controls for all types of both diesel and petrol engined driven vehicles become more demanding – and Asian growth continues.  Asian nations will also implement stricter emission controls with diesel hugely dominant in the larger truck sector and potentially a big growth market at the lower end of the scale.  While hybrid engines might begin to have an impact on overall numbers this will be very small in percentage terms in the near future and except in the case of wholly electric vehicles, pgm catalysts will remain part of the mix anyway.  Whether this will involve platinum or palladium largely depends on the type of hybrid – and in some cases the hybrids will require even higher pgm loadings.

So, in summary, Duncan reckons diesel engines are absolutely essential for reaching CO2 emission standards globally.  In a typical light vehicle fleet situation 40-45% will still need to be diesel-powered to meet standards. Overall catalytic systems will become more and more complex in order to concur with ever-tightening legislation and more complex systems mean higher pgm loadings, with new power train systems probably having little impact on the market for the rest of the decade and the early 2020s.

All in all this suggests that there will remain an important, and growing, market for pgms in the catalytic converter market and that with diesel remaining essential for meeting the greenhouse gas emission standards, platinum looks to have just as good a future as palladium in terms of demand growth – although the hugely adverse recent media coverage may have a short term impact on diesel light vehicles in Europe in particular.  Perhaps not so gloomy for platinum after all.

20 Oct 2015

About the author

Lawrence Williams

Lawrence (Lawrie) Williams is a well known London-based writer and commentator on financial and political subjects, but specialising in precious metals news and commentary. He is a qualified and experienced mining engineer having graduated in mining engineering from The Royal School of Mines, a constituent college of Imperial College, London - recently described as the World’s No. 2 University (after MIT).

e: lawrie.williams@sharpspixley.com