* More than half of platinum stocks now seen in London
* Swiss platinum, palladium exports to UK jumped last year
By Jan Harvey
LONDON, March 28 London is overtaking Zurich as
Europe's biggest centre of platinum and palladium trading,
traders say, less than four years after the 'loco London' market
for white metals was launched.
Clearing and settlement of platinum and palladium trades,
which had previously been carried out almost entirely in
Switzerland, has quietly been gathering pace in London since
Since then, platinum and palladium holders have increasingly
shifted physical metal from storage vaults in Switzerland to the
UK, traders said, with data from the Swiss customs office
showing a rise in exports of the metals to Britain in that time.
While no volumes data is published for either Zurich or
London, Peter Smith, head of the London Platinum and Palladium
Market (LPPM), told Reuters the majority of the market was now
trading on a 'loco London' basis.
"Like everything else it took a while to get critical mass,
but once the clearing members decided they would make metal
available loco London... it became self perpetuating," he said.
"In all probability, the relationship will end up much the
same as it is for gold, in that London is the prime centre for
physical precious metals," he added.
The greater variety of clearing services - which act as a
buffer between buyer and seller - offered by London is
particularly appealing to investors after the global financial
crisis raised concerns over counterparty risk, traders said.
On a net basis, the amount of raw palladium shipped from
Switzerland to Britain more than tripled last year to 33.096
tonnes, according to Swiss customs data, against 9.132 tonnes in
2011. Net raw platinum shipments rose 62 percent to 30.1 tonnes.
EXPORTS TO UK RISE
These were likely to represent transfers of metal from one
vault to another, rather than actual underlying demand, traders
in the UK and Switzerland said.
Precious metals consultancy GFMS now estimates that more
than half of the world's 4.4 million ounces of above-ground
platinum stocks are located in the UK.
While the quantity of platinum and palladium shipped from
Switzerland to the UK varies widely from month to month, average
monthly raw platinum exports have risen to 2,138 kilograms since
September 2009 from 547 kilograms over the previous five years.
Average monthly raw palladium exports to the UK have risen
to 2,688 kilos from less than 1,200 kilos in the same period. In
the first two months of 2013, palladium exports from Switzerland
to Britain have already reached nearly half last year's total.
"London is the premier trading centre for gold and silver
and it makes sense given the vaulting infrastructure and other
factors to make that the case for platinum and palladium as
well," an industry source said.
The London market has added vault capacity in recent years.
Barclays opened a major new precious metals vault there in
September, while Deutsche Bank announced a year ago it would
open a new UK vault.
According to traders, vaulting fees for precious metals are
sometimes more attractive in the UK than in Switzerland.
"The Swiss banks charge higher fees than those in London,"
one platinum group metals trader said. "And as London is able to
clear platinum group metals now, there is no need anymore to
keep everything in Switzerland."
(Editing by Veronica Brown and James Jukwey)