Business Day (Johannesburg)
Charlotte Mathews
2 July 2009
Johannesburg — PLATINUM stocks in Swiss vaults were rising as global automotive demand remained weak, suggesting this year's price gains would be subdued, analysts said this week.
But palladium stocks were still falling, and while there was still more than enough palladium available for industry and investors, the price was starting to firm.
SA is the world's biggest producer of platinum, which accounts for 35% of its mining output, and the second-biggest producer of palladium. Prevailing rand strength, combined with a subdued price outlook, would hit platinum companies and SA's export earnings.
James Moore of TheBullionDesk in London said platinum struggled to hold above 1200/oz at the end of the June quarter. Technical indicators suggested it the metal could trend lower.
Given the metal's fundamentals and factors such as SA's pay talks and possible approval of exchange- traded funds (ETFs) in the US, "we expect dips to find further support from longer-term investors".
Palladium posted the strongest of the precious metals gains in the June quarter, closing at 250/oz. It was vulnerable to short-term weakness but could test 258-262 as it was increasingly substituted for platinum in vehicle autocatalysts.
Precious metals refiner Heraeus said in its weekly report that palladium was benefiting from chart-based trading and a rise in ETF holdings, now at a record level. But platinum fell sharply after the World Bank reported the global economy was worsening, causing investors to sell.
Investment bank UBS recently reported Swiss stocks of platinum were at their highest level since 2007 as platinum destined originally for autocatalyst manufacturers had to be stored into Swiss vaults. Unless the global economic outlook improved significantly, the price of platinum could drop to 1125/oz, Heraeus said.
Bloomberg reported New York- based research house CPM Group forecast platinum could average about 1200/oz this year, down 21% from last year's average of 1522/oz, while palladium could average 240/oz, or 29% below last year. It noted rising investor demand for palladium and its substitution for platinum.
Société Générale said this week that commodities could continue to attract investors as a hedge against inflation and would benefit as countries started to emerge from recession in the second half of this year.
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