This is the link to the article that I will be discussing:
http://www.iol.co.za/business/markets/commodities/platinum-shortages-grow-as-car-sales-quicken-1.1596904#.Umyf2vkyY6VDuring recent years it is said that Platinum will be the most highly demanded precious metal due to record high car sales as is used in the production of cars. The price of platinum has risen by 13% and increasing the price of platinum to $1635 an ounce. It is stated by the article that the supply of platinum will be in shortage for the longest period of time since 2005. This shortage is due to the fact that the supply of platinum is very inelastic. This is as a result of several reasons such as the fact that platinum is a rare metal. Also mining equipment is very expensive and difficult to put such machines into service requiring a large amount of time to increase the speed of mining operations. The supply of rare metals also tends to be limited by suppliers in order to keep prices high due to their rarity and by limiting supply they will maximize profits over an extended period of time. By limiting supply the supply elasticity would become inelastic. All of these factors contribute to the platinum shortages as producers are both unable and unwilling to raise supply. Though producers do have stockpiles in reserve it is mentioned by the article that 'metal stockpiles are dwindling as producers fail to keep up with demand'.
This graph shows the demand and supply of the platinum market:
The supply curve shows that the supply of platinum is very inelastic and because of this suppliers could not meet demand.