China Auto Emissions Standards Rise in July

Chinese auto sales have been slumping and one reason may be the rollout of stricter emissions standards.

Caixin: Stricter Vehicle Emission Standards May Spell Further Bad News for Hobbled Industry
The country will soon adopt the sixth phase of its vehicle emission standards, which China claims is even stricter than the European Union’s. Once it goes into effect, dealers will no longer be able to sell vehicles with that don’t meet the rigid requirements.

As China grew increasingly aware of pollution, the government decided in mid-2018 to move up the implementation date for the new standards in certain prominent areas including Beijing, Chengdu and south China’s Pearl River Delta. The new rules will go into effect in July 2019 – one year earlier than their previously scheduled date.
World Platinum Investment Council: China clean air, PGMs and platinum
China has some way to catch up with PGM loadings in more mature markets. The right-hand graph above shows PGM loadings per vehicle in North America, Japan and China. Several factors explain the differences including average engine size, fuel mix differences (thus excluding Europe), and, most importantly, emissions standards. Nonetheless, as emissions standards and wealth improve in China, PGM loadings should continue to approach those of more developed regions, thus providing a demand push for PGMs, including platinum, by potentially as much as a gram per vehicle.

As palladium goes further into deficit, it should tighten the platinum market. The Chinese demand trend is significant as it represents 26% of global PGM demand. Should Chinese automakers see supply risk and/or cost disadvantage in palladium, the platinum market offers ample capacity to satisfy increased PGM demand.

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