Auto converters driving metal price: Stillwater

NEW YORK (Reuters) - Platinum and palladium producer Stillwater Mining Co. (SWC.N: Quote, Profile, Research, Stock Buzz) said on Wednesday that new environmental standards for motor vehicles in the United States and Europe is driving demand and prices for the two metals.

"There's a big surge in diesel car building over in Europe and now we're going to have the diesel technology here and that's going to be very important for demand for platinum and now palladium," Chief Executive Officer Frank McAllister told the Reuters Global Mining and Steel Summit in New York.

Approximately half the market for palladium and half for platinum is in the manufacture of catalytic converters, which remove dangerous pollutants from auto emissions.

The price of platinum was approximately $900 an ounce last year and on Wednesday was at $1,220/$1,228 an ounce. Palladium was at $325/$332 per ounce and has been roughly steady at that level for some four years after falling from a high of over $1,000 in early 2001.

"The reason for that improvement in price is basically due to demand driven by diesel catalytic technology," said McAllister.

He noted that on June 1, new Environmental Protection Agency regulations call for the removal of sulfur from diesel fuel in the United States.

"That was required by the EPA," said the Stillwater executive. "We are preparing for the next model diesel truck and that will be platinum-rich technology.

He said he recently met with executives of German automaker Volkswagen who told him they already have diesel catalytic converters on all of their cars.

"They said on July 1 they will start using 25 percent palladium in their diesel catalytic converters as well," McAllister said.

Other automakers are not talking a lot about it "but it's happening," said McAllister. "Some say palladium can go to 40 percent in diesel catalytic converters."