Platinum price signals gains for industry players
Platinum has breached the $1 000 an ounce mark for the first time this year, signalling gains for local players - but the industry is not out of the woods yet.
|||Johannesburg - Although platinum has breached the $1 000 (R15 165) an ounce mark, signalling gains for local players, the industry is not out of the woods yet.
The platinum price, which has gained momentum over the past three months, strengthened to $1 069.38 an ounce yesterday, compared with its 28 percent tumble to $803 an ounce at the end of last year.
However, it is far from its peak of $2 308 an ounce, reached in March 2008.
Johan Theron, a spokesman at Impala Platinum, the world’s second-biggest platinum producer, said: “Looking at all these pricing mechanisms, we have seen an aggregate increase in the rand basket price of approximately 15 percent over the past few months.
“While this is very welcome, the prevailing rand basket price is still some distance from the historical price trajectory, especially when you consider the growth in input cost over the same period.”
The platinum price has declined on the oversupply in the market, China’s slowdown and the fragile global economic environment.
China is the world’s biggest platinum consumer and a major driver of jewellery demand. However, its weakening economy has had a knock-on effect on consumer spending on luxury goods, including cars and jewellery.
Positive outlook
Analysts, however, have predicted a positive long-term outlook for the precious metal.
Sibonginkosi Nyanga, an analyst at Momentum SP Reid Securities, said the economies of the biggest platinum producers were under intense pressure, a phenomenon that could cut into the supply of platinum and help balance the market.
“The prolonged period of lower platinum prices has forced platinum producers to scale back their capital expenditures for the next two years. This means that the market could experience some equilibrium in supply and demand, which might stabilise the price of platinum,” Nyanga said.
The market fundamentals of platinum look positive as the World Platinum Investment Council (WPIC) and Switzerland’s Valcambi yesterday announced a partnership to increase the availability of platinum bar and coin products for the global retail market, initially targeting the US market.
The WPIC said the programme, aimed at stimulating demand for platinum investment bars and coins, focused initially on the US, where there was significant demand for physical platinum products.
Theron said the programme would hopefully stimulate new sources of platinum investment demand over time that would ultimately increase the profile and relevance of the metal as a desirable investment instrument.
* With additional reporting by Bloomberg
BUSINESS REPORT