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Platinum hits record at $2,087 on supply squeeze

Platinum hits record at $2,087 on supply squeeze
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First Published: Mon, Feb 18 2008. 10 49 AM IST
Updated: Mon, Feb 18 2008. 10 49 AM IST
Singapore: Platinum hit a record high for the 13th sucessive day on Monday on lingering power supply shortages which have disrupted mining in main producer South Africa.
Platinum, used in jewellery and auto catalysts, has gained more than 20 % since late January and more than 30% in 2008 after South Africa, which accounts for 80% of global supply, was hit by power cuts that forced mines to shut for five days last month.
Spot platinum hit a high of $2,087 an ounce, driven by investor buying and purchases from auto makers, up from $2,050/2,055 an ounce late in New York on Friday.
Palladium jumped to its highest level in more than 6 years at $452.50 an ounce to track its sister metal platinum.
“At this moment, nobody knows the future price of platinun, but I personally presume it will be $2,100 at the end of this month,” said Yukuji Sonoda, precious metals analyst at Daiichi Commodities in Tokyo.
“In Japan, many automobile companies are very nervous about future platinum prices. They will increase stocks for another two or four months. I personally think there’s a minimum deficit of 11 tonnes (353,657 ounces),” said Sonoda, referring to his forecast for the 2008 global supply deficit.
Mines across South Africa have been hit by a lack of power after state utility Eskom asked the mining sector to cut power use to 90% of normal needs to ease a nationwide shortage caused by the failure of electricity generation to match economic growth.
Other analysts say the global platinum deficit could widen to 400,000 to 500,000 ounces by the end of 2008, from about 265,000 ounces in 2007. The market had a surplus of 65,000 ounces in 2006 following seven successive years of deficit.
“There is no ceiling for platinum as long as the power problem in South Africa stays unresolved,” said Shuji Sugata, manager at Mitsubishi Corp Futures and Securities.
“In this sentiment, nobody can sell heavily or take fresh short positions.”
Japanese platinum futures were also at record highs. The most active December contract on the Tokyo Commodity Exchange rallied by the daily 240 yen limit to a record high of 6,945 yen.
Sugata said TOCOM’s move to impose an extraordinary margin on platinum futures contracts has not had any major impact.
“The current uptrend in platinum has not been led by TOCOM. Also considering open interest in platinum is not big, there is no big impact after more margins,” he said.
TOCOM imposed an additional margin of 60,000 yen per contract to all new positions built for platinum futures contract from Monday on top of the initial margins in an effort to cool down the market
Palladium hit a bid high of $452.50 an ounce, up from $444/449 an ounce.
Gold rose to $904.60/905.40 an ounce from $903.00/903.80 an ounce late in New York. Silver edged down to $17.08/17.13 an ounce from $17.11/17.16 in New York.
COMEX’s April gold futures added $1.6 an ounce to $907.8 an ounce.
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First Published: Mon, Feb 18 2008. 10 49 AM IST
More Topics: Markets | Precious | Gold | Platinum | Palladium |