NY precious metals higher midday, led by PGMs NEW YORK, June 5 (Reuter) - COMEX and NYMEX precious metals futures were higher midday Thursday in choppy trade, with the focus again on platinum group metals (PGM), after traders suspended market making in PGM forwards and leasing overnight.
``It's good to see some of the bullishness in the PGMs spilling over into gold and silver this morning,'' Friedberg Mercantile Group fund manager in Toronto, Chris Foster, said.
PGM dealers were meeting in London and Zurich Thursday to discuss the acute shortage of metal, amid talk of defaults in spot market transactions in the physical market and a failure to clear some deals overnight.
However, deliveries of the NYMEX June palladium contract, due to expire on June 25, were proceeding normally, exchange officials said.
NYMEX warehouse stocks of palladium fell 2,600 ounces to 52,700 ounces Thursday, but open interest in NYMEX June palladium fell 399 lots (39,900 ounces) to 362 contracts (36,200 ounces). Total open interest in NYMEX palladium fell 456 lots to 7,838 contracts overnight.
NYMEX June palladium was down $2.80 an ounce at $200.00 midday, after some liquidation by a trade house, but not before seeing a new contract high at $214.00 an ounce early.
September palladium was up 20 cents at $173.00 an ounce.
In the spot market, palladium where quoted was notionally around $212.00, compared to the London Thursday fix at $235.00 an ounce, the highest since fixings began in 1989.
On Wednesday spot palladium reached a 17 year high at $230.00, with one month lease rates jumping to over 150 percent.
NYMEX July platinum was up $8.90 an ounce at $423.00 an ounce, after seeing a new contract high at $423.00 early.
Spot platinum prices soared to a high around $446.00 an ounce early Thursday, up from around $420.00 Wednesday, and was fixed in London Thursday at $440.00, the highest fixing since September 15, 1995.
NYMEX platinum group metals futures (PGMs) ended sharply higher Wednesday, as supplies of the white metals continued to dry up in the physical market in the absence of Russian exports for the past five months.
Platinum and palladium users expected Russian supplies would have resumed by now, and have been borrowing the metal to cover their needs, but world inventories have been drawn down in the absence of Russia, the world's biggest supplier, from the market, and the situation is getting critical, traders said.
Russian officials told Japanese traders Wednesday that Russian platinum and palladium exports would resume on June 20, but they also said the export licences had still not yet been granted by the Russian Ministry of Foreign Economic Relations.
Russia supplies about 60 percent of the world's palladium and about 20 percent of its platinum, but fiscal and administrative problems and a possible change of marketing strategy led to a suspension of exports last December.
Last year Russia supplied 4.6 million ounces out of total world consumption of palladium of 6.8 million ounces, according to a report last month by refiners Johnson Matthey.
Also complicating the supply situation is the large stockpile of about 1.5 million ounces of palladium believed to be held by US fund, Tiger Management, traders said.
But sources close to the fund said Tiger Management's palladium position was a long term holding and the fund had not begun liquidating its physical stockpile.
An alternative source of supply being discussed Thursday was the holding by the U.S. Defense Stockpile of 1,264,000 ounces of palladium and 431,000 ounces of platinum.
Meanwhile, COMEX August gold was up $1.40 an ounce at $345.00.
In the bullion market, spot gold was quoted $342.70/20 an ounce, compared to the London Thursday afternoon fix at $340.80 and the New York close Thursday around $341.00/50.
Implied lease rates for gold rose sharply to 1.45 percent for one month Thursday from 0.82 percent Wednesday in activity believed related to the problems in the PGM market, traders said.
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