Various media reports about potential delivery bottlenecks are responsible for the recent price increase in platinum, as the German precious metals trading group Heraeus reported in its latest weekly market analysis. In South Africa, one of the world’s most important mining countries, production problems have once again caused interruptions.
Temporary close-downs of production facilities occurred due to further mining accidents, which strongly supported the positive development of the platinum price. After Lonmin, the third biggest platinum producer worldwide, publicly announced that it had sold roughly 40 percent less platinum during the last quarter, the platinum price had received another boost. On the one hand, speculative investors were contributing strongly to the platinum demand by betting on future supply and delivery bottlenecks. Nevertheless this was not the only factor that led to a rising demand for platinum. Compared to the same period of the previous year, industrial users also stocked up on larger quantities of the precious metal. The majority of industrial users probably aim to stock up on platinum in order to bring the stockpiles to an adequate level in case of potential production bottlenecks. Last week, China and some other Asian countries celebrated the beginning of the New Year festivities. Some of the major markets in the region remain closed between February 1st and 8th. For this reason investors should expect a temporary slowdown in the demand for the metal. In Thursday’s trading session platinum closed at about US$1,840 per ounce.
While gold and silver remained in correction mode during the last weeks, palladium had once more succeeded in disconnecting from this trend and climbing to a new multi-year high. Thus palladium reached US$825 per ounce. As has often been observed in the past, palladium later suffered a heavy setback to US$775 per ounce. At the end of Thursday’s trading session the precious metal was priced at US$820 per ounce again. The technical trend supported and justified a continuing optimistic outlook, since this trend had not been interrupted since the beginning of the current rally phase, which started in May 2010. In contrast to gold, investor demand for platinum and palladium would rise further, as Heraeus stated. The main reason could be a growing optimism towards the economy. The consequence is a rising speculative demand for precious metals that are used in many industry sectors. Instead of fleeing to save havens like gold, a greater number of investors make their bets on potential delivery bottlenecks in the platinum and palladium sector. For this reason investors strongly engaged in so called sector ETFs that are partially covered by physical stocks of both metals.