..Heard from Lib last week that a new circuit was been added to capture platinum and palladium.Palladium Rises on Demand for Cheaper Alternative to Platinum

By Pham-Duy Nguyen

Oct. 13 (Bloomberg) -- Palladium, used in car and truck exhaust systems as a cheaper alternative to platinum, rose the most in more than a week as a rebound in equities worldwide revived the metal's demand prospects. Platinum fell.

The Standard & Poor's 500 Index rose as much as 7.3 percent today after shedding 18 percent last week. Most platinum and palladium consumption is for emissions-control parts for automobiles. Palladium is down 66 percent since reaching a six- year high in March, and platinum has dropped 57 percent from a record as a global slowdown reduced demand.

``People are looking at the relative costs of things now,'' said Frank McGhee, head dealer at Integrated Brokerage Services LLC in Chicago. ``They're much more aware of the fact that they'd rather use $200 palladium than $1,000 platinum.''

Palladium futures for December delivery rose $6.30, or 3.2 percent, to $203.80 an ounce on the New York Mercantile Exchange, the biggest gain for a most-active contract since Oct. 1. The price still is down 46 percent this year after rallying the previous three years and reaching $600 on March 4, the highest since July 2001.

Platinum futures for January delivery fell $7.60, or 0.8 percent, to $997.60 an ounce in New York. The price rose 4.1 percent last week, the first such gain since August. Platinum has fallen from a record $2,308.80 an ounce on March 4.

A drop in platinum to $922 may attract buyers, analysts at Societe Generale said today in a report. The metal has fallen 35 percent this year after rallying for six straight years.

Automakers General Motors Corp., Ford Motor Co. and Chrysler LLC are under pressure as the global credit crisis makes it harder for buyers to get loans and dealers to finance their operations. U.S. industrywide sales tumbled 27 percent in September, the most in 17 years.

Carmakers account for more than 60 percent of global platinum use, according to metals trader Johnson Matthey Plc in London.

To contact the reporter on this story: Pham-Duy Nguyen in Seattle at pnguyen@bloomberg.net.

Last Updated: October 13, 2008 13:44 EDT