Platinum ETPs hit record high, supply risks dissipate

NEW YORK (Scrap Register): Choppy price across the sector has been dictated by external markets, receding risks and tapering expectations. For the PGMs, even though the three largest producers in South Africa have yet to reach a wage agreement, Impala Platinum, the second-largest producer, has said talks will restart in 2014, said Barclays Research in a snippet.

 

The AMCU has permission to strike against all three producers but has remained at the negotiation table for now. The National Union of Mineworkers, on the other hand, has been on strike at Northam Platinum (2012 platinum production: 182koz) for six weeks. 

 

Barclays maintains the view that coordinated strike action poses the greatest upside risk to platinum prices; however, the risk of strike action has now been deferred to January. The latest data from Statistics South Africa revealed PGM production rose by 16.4% y/y in October, taking output up 3.9% for the year to date. However, rather than a substantial improvement in supply, this reflects the sharp drop in output last year following the industrial unrest.                                                                                                   

 

Above-ground stocks of platinum have been healthy this year, as implied by sponge discounts and Nymex warehouse stocks stabilising above 250koz after peaking at 288koz in October this year. Furthermore, the world’s largest physically backed platinum ETP, NewPlat, now holds 893.7koz after having been launched in late April. 

 

Inflows across the 15 products we track have reached 924koz, set to be by far the largest annual inflow – the previous record was set in 2010 at 590koz. Although the UK-listed product has suffered from net redemptions, most products have had fresh inflows across regions. Total platinum held in trust now sits at a record 2.7Moz.