Angloplat opposes Swiss plan for platinum ETF
By Eric Onstad
JOHANNESBURG (Reuters) - The world's biggest platinum producer Angloplat will not supply physical metal to a planned exchange-traded fund based on platinum because it would sharpen supply shortages, the firm said on Tuesday.
"The reason why we as a producer are opposed to it is that it takes metal away from physical consumption and therefore would push the price up," said Trevor Raymond, senior manager of investor relations at South Africa's Anglo Platinum.
Switzerland's Zurich Cantonal Bank planned to launch ETFs based on platinum, palladium and silver from next month, it said in a statement dated April 13. (See)
ETFs have been very successful in the gold sector since they allow investors to gain exposure to commodity markets without worrying about setting up futures trading accounts or taking physical delivery.
Sponsors of such funds buy a matching amount of the metal from the market to keep in bank vaults.
"To establish an ETF in platinum would be difficult given the shortness of supply of the metal and we don't believe any of the producers would support it," Raymond said.
Michael Widmer, director of metals research at Calyon Corporate and Investment Bank in London, said a string of market deficits in the metal in recent years had slashed inventories.
"That means that the above-ground stocks that you had maybe 10 years ago and that you could have simply shifted from stocks at banks to stocks at the ETF, have been drawn down because of high physical demand from autocatalyst producers," he said.
"That makes it very challenging for them (Zurich Cantonal Bank)."
BAD TIMING
Second-ranking Impala Platinum Holdings Ltd said the Swiss bank's proposed launch came at bad time.
"Given the current market conditions, it's probably not the opportune time to launch a product like this because it's just going to put further upward pressure on the price," said Bob Gilmour, manager of investor relations.
"In the longer term, this is not what you want for demand because it causes attempts at substitution."
Gilmour said Implats had very little metal available for the spot market. "All our metal is basically on long-term contracts, 90 percent plus," he said.
The platinum market is very different from gold, where tonnes of metal bought for investment purposes or by central banks sit in vaults available for lending.
Platinum is in high demand for use in auto catalytic converters that clean pollution from exhaust and is also popular in jewellery. The jewellery sector is very price sensitive and is the main area that suffers weak demand when prices rise.
Jewellery demand for platinum was due to fall by 11 percent to 1.74 million ounces last year due to higher prices, precious metals refiner Johnson Matthey said in a report in November.
Spot platinum touched a record peak of $1,395 per ounce last November and was bid at $1,265 on Tuesday.
South Africa's Anglo Platinum Ltd, majority owned by mining giant Anglo American Plc, accounts for around 40 percent of global platinum production.
Implats accounts for nearly another 30 percent of world platinum supply from its mines and refining operations.
© Reuters 2007
