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PGMs Surge On Reports That Implats Declares Force Majeure

By Allen Sykora of Kitco News
Thursday February 27, 2014 3:53 PM

(Kitco News) - Platinum group metals surged Thursday on worries that a strike in the South African mining sector will mean tighter supplies if there is no resolution in the not-too-distant future.

In particular, analysts cited news reports saying that one of the major producers whose operations has been shut down, Impala Platinum Holdings Ltd, has declared a force majeure on supply contracts after a strike of five weeks in the South African PGM mining sector.

April platinum settled Thursday with a gain of $24.30 to $1,453.40 an ounce. Sister metal June palladium rose $10.75 to $742.25.

Edward Meir, commodities consultant with INTL FCStone, said “we saw sharp advances in both palladium and platinum on news that South Africa’s Impala Platinum will declare force majeure on supply contracts out of its Rustenburg mine.”

The Association of Mining and Construction Union staged a walkout against the world’s largest platinum-mining companies, including Implats, on Jan. 23. The union is also striking against Anglo American Platinum and Lonmin, and news reports say walkouts have shut down some 40% of the world’s platinum output.

The market is worried about companies like Implats running out of metal to meet future commitments, analysts said. This would mean a tightening market, as previously producers were thought to have built up in inventories ahead of the strike.

“Perhaps there’s some concerns that mining strike might be prolonged. And that has helped PGM prices,” said Howard Wen, analyst with HSBC.

The stronger tone in equities is also helping PGMs, he added. Stronger stocks are seen as an indicator of an improved economy and thus demand for industrial metals, including risk assets such as PGMs.

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By Allen Sykora of Kitco News; asykora@kitco.com



Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in precious metal products, commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.
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