Singapore: Platinum roared to a record high for the 14th straight session on Tuesday, topping $2,100 an ounce on fears of tight supply after power problems in main producer South Africa disrupted mining.
Spot platinum hit a high of $2,124 an ounce, up from $2,105/2,115 an ounce late in London on Monday. The metal has gained more than 30% this year on speculative buying ignited by worries of a widening supply and demand gap.
“We don’t know when it’s going to stop,” said Ronald Leung, director of Lee Cheong Gold Dealers in Hong Kong.
“But of course it’s rising so fast. It’s not healthy. It can’t sustain the high level if there’s no real demand. It’s only speculative buying,” said Leung, referring to a possible correction.
Analysts say the global platinum deficit could widen to 400,000 to 500,000 ounces by the end of 2008, compared with about 265,000 ounces in 2007. The market had a surplus of 65,000 ounces in 2006, following seven successive years of deficits.
The world’s No. 1 producer Anglo Platinum has said the power problem alone would cut output by 120,000 ounces in 2008, while Impala Platinum, the world’s No. 2 producer, forecast “very tight market conditions.”
Japanese platinum futures were also at record highs. The most active December contract on the Tokyo Commodity Exchange surged 202 yen per gram to 7,103 yen.
“The platinum market has already been worried about supplies in South Africa and this power problem emerged to trigger more buying because we all knew this won’t be resolved easily,” said Hisaaki Tasaka, a market analyst at Ace Koeki in Tokyo.
“But at the moment, we are not seeing an actual shortage in supplies as lease rates have not surged,” Tasaka said.
While speculative buying drove up the price, some dealers in Japan said platinum lease rates had been steady at 9% since January. Lease rates usually rise when there is a shortage in the physical market.
Platinum’s major industrial use is in catalysts, particularly in diesel vehicle catalysts, as it helps cleanse environmentally damaging fumes from motor exhausts. It’s also used in jewellery.
Sister metal palladium hit a bid high of $473 an ounce, its highest level in more than six years, up from $466/470 an ounce.
Gold rose to $906.40/907.20 an ounce from $903.00/903.80 an ounce late in London, off a record high of $936.50 an ounce hit in early February.
“I think it’s still consolidating at $890 to $920 for a while, and then see what happens,” said Leung of Lee Cheong Gold Dealers, adding that the physical market saw some buying from jewellers in Thailand.
Silver edged up to $17.15/17.20 an ounce from $17.00/17.05 an ounce.