INTERVIEW-Clunkers schemes neutral for platinum -recycler

* Car sales boost from scrappage schemes may not lift Pt

* Recycled supply may rise to help offset extra demand

LONDON, Aug 14 - Scrappage schemes may prove neutral for the platinum and palladium market balance as recyclers salvage more metal per unit from scrapped cars than is used in newer models, the director of the world's biggest autocatalyst recycler said.

"The rise in vehicle sales resulting from these programmes does imply some larger measure of increase in platinum group metals consumption than would have existed otherwise," Ashok Kumar, director of U.S.-based A-1 Specialized Services&Supplies Inc, said.

"But this increase in demand for PGMs will most likely be offset, more or less, by the amount of material that will be recovered from the recycling of vehicles surrendered in these various plans."

A-1, based in Croydon, Pennsylvania, recycles platinum, palladium and rhodium salvaged from internationally sourced scrap autocatalysts into commodity-grade metal, which it sells on to consumers.

The three platinum group metals are chiefly used in catalytic converters, which filter harmful emissions from car exhausts.

Kumar said scrapped vehicles that are nine years old or more were mostly fitted with converters containing greater quantities of metals and heavier relative loadings of palladium than are used in the smaller, more fuel efficient engines on cars permitted for purchase under current recycling schemes.

A rise in car sales linked to so-called "cash for clunkers" schemes -- under which consumers are offered incentives to scrap older cars for newer ones -- has helped lift platinum and palladium prices from the multi-year lows they hit last year as the global recession knocked car demand.

Under the U.S. clunkers programme introduced in July, consumers receive a federally backed rebate of up to $4,500 for the trade-in of an old car for a new one.

Similar schemes were introduced in Europe earlier this year. The implentation of a clunkers plan in Germany, where consumers were offered 2,500 euros ($3,569) for scrapping cars more than 9 years old, led to a 40 percent surge in car sales in March.

SCRAP SUPPLY JUMP

The introduction of the European clunkers schemes, in conjunction with a recovery in metals prices, led to a 60 percent jump in autocatalyst scrap supply from the region in the first three months of 2009, Kumar said

Supply had slumped in late 2008 as dealers held scrap off the market in anticipation of a price rise, he said.

Overall, Kumar said, the introduction of European and U.S. car scrappage schemes should temper a sharp drop in the amount of recycled platinum group metals coming onto the market this year due to lower prices.

"For the recycling industry, the scrapping of more than half a million additional vehicles in the U.S. than would otherwise be available has obvious positive consequences," Kumar said.

"The availability of this added scrap supply to the market should limit further declines in secondary supply to this sector," he added.

"The successful implementation of similar scrappage schemes in Europe has already bolstered the amount of available salvage autocats thus far in 2009."

Kumar estimates that platinum from reclaimed converters could total 745,000 ounces worldwide in 2009, some 24 percent below the previous year. A-1 is responsible for 45-55 percent of all such supply worldwide, he said.

The expected fall in reclaimed metal this year, despite the scrappage schemes, is largely due to the comparison with last year's high figures.

Scrap recycling rose sharply in the early part of 2008 as PGM prices soared, with platinum and rhodium touching all-time highs of $2,290 an ounce and $10,050 an ounce respectively.

He expects some 900,000 ounces of palladium and 175,000 ounces of rhodium will be produced from recyclers this year, 16 percent and 19 percent below last year's level.

Spot platinum was bid at $1,263.50 an ounce at 1405 GMT on Friday, while spot palladium was at $276 an ounce. Rhodium was at $1,650 an ounce.