Platinum can touch $1,400/oz only if gold zooms
2009-10-29 14:25:00
LONDON (Commodity Online): Is the precious metal--platinum--running out of steam? Is it wise investing in platinum, as it has now been reported that platinum is the hottest precious metal that Chinese are buying these days. But not everyone is upbeat on platinum as an investment. Here is an investment analysis on platinum from Fortis Metals Monthly.
Platinum reached $1,371/oz on the London PM fix of 20th October, its strongest fix since September 2008. Yet despite a spurt higher on the 20th, the real price rally happened in early September, when it rose from just above $1,200/oz to $1,339/oz by the 16th.
Since then it has found it tougher going, rising just 2%, smaller than gold, silver or palladium. Investors continue to add to their ETF positions, although nowhere near as rapidly as in palladium. The UK ETFS ETF saw its holdings rise from 330,007 oz at the start of September to 377,424 oz by 16th October. The Swiss ETF also gained, adding about 12,000 oz over the same period to stand at 204,893 oz.
The demand situation is hard to call. One positive was that European car sales, the major market for platinum, didn't fall off a cliff in September, despite some incentives expiring at end August, including the all-important German scheme. German sales were 316,000, 21% higher year-on-year (compared with 28% higher in July and 40% at the peak in March/April).
Less positive is the continuing fallback in diesel sales from their peak of 53.6% in 2007. In August (latest available data) they accounted for just 42.2% of the EU15 market, down from 45% in July and 51.9% in January. It's too soon to say this is a definite long-term trend, as the European market has been skewed by incentive scheme's and the largest, Germany, has seen the most dramatic decline for diesel, with just 28.5% in August, compared with 44.1% in 2008.
Chinese platinum imports remain strong, with 4.4t of unwrought platinum imports in August, up from 3.6t in July and the highest unwrought figure since October 2008. In addition, 2t of semi-manufactured platinum was imported, up from 1.3t in July. Imports into Hong Kong, however, have tailed off, with 2.6t in July compared with 2.8t in June and between 4.7t and 6.4t a month in the first five months of the year.
Platinum Outlook
Platinum will probably find it difficult to make further gains towards $1,400/oz without more signs of ongoing supply problems. But if gold continues to push higher then it too will creep higher and the potential for a US ETF launch should help. Short-term London fix: $1,300/oz-$1,420/oz.
Some Platinum News
Oct 9th: The index of South African platinum and palladium production was 125.5 in August, down from 140.9 in August 2008, a fall of 11%.
Oct 8th: Northam Platinum announced a downsizing of its Booysendal project. Expected production would now be 245,000 oz of PGMs when fully operable, down from an original 430,000 oz. The reduction has decreased the cost from Rand 8bn ($1.3bn) to Rand 6bn. Full production is expected by 2015.
Sept 28th: Impala Platinum's production in fiscal year July 2009 - June 2010 could fall to 850,000 oz, from previous expectations of 950,000z.
