|Platinum Group Metals Underpinned By Johnson Matthey Report, South African Strike
13 November 2012, 9:19 a.m.
(Kitco News) - Platinum and palladium rose early Tuesday after the combination of a Johnson Matthey report showing 2012 supply deficits for both metals and news of violence in a continuing strike in South Africa against Anglo American Platinum, traders said.
As of 9:20 a.m. EST, platinum for January delivery was $15, or 1%, higher at $1,581.50 an ounce on the New York Mercantile Exchange. Sister metal December palladium was up $10.20, or 1.7%, to $618.25 an ounce. The moves come on a day when gold was softer.
Steve Scacaloss, vice president and director of global precious metals with TD Securities, said PGMs rose smartly after a bullish Johnson Matthey report.
Johnson Matthey’s Platinum 2012 Interim Review, released overnight, said the platinum market is swinging to a 400,000-ounce supply deficit this year from a 430,000 surplus in 2011 as South African supplies fell to their lowest level since 2001 and volumes from auto-catalyst recycling declined. South Africa provides some three-quarters of the world’s primary platinum output, and the mining sector there has been hit this year by a series of safety stoppages and strikes. The report said palladium is swinging to a supply deficit of 915,000 ounces from a 1.255 million surplus last year. While also affected by the South African supply disruptions, this turnabout was in large part due to a swing to net investment from disinvestment a year ago, lower Russian stockpile sales and stronger demand, according to the Johnson Matthey report.
The rally began around the time the report was released, said Filip Petersson, commodity strategist with SEB Commodity Research. “It was quite bullish on the platinum side,” he said. Many in the market had wondered if the ongoing issues in South Africa were going to push the platinum market into a supply deficit, and the Johnson Matthey report was seen as confirming this.
Afshin Nabavi, head of trading with MKS Finance, also said there were news reports of violence in the Amplats strike about the time the platinum group metals rallied.
In particular, he cited reports of striking workers attacking non-striking workers. Also, police said the body of a non-striking worker was found near a mine hostel. One news report said the incidents occurred Monday but were reported by police Tuesday.
“Platinum rallied from $1,565 to $1,580 in a matter of seconds,” Nabavi said. Buying then continued, enabling January platinum to get as high as $1,595.
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By Allen Sykora of Kitco News; firstname.lastname@example.org