Bank of America Lifts 2010 Platinum Price Forecast

LONDON, Aug 7 -- Bank of America Merrill Lynch (BAC.N) said it has raised its forecast for platinum prices in 2010 to an average $1,350 an ounce from $1,250 previously, citing constraints to mine supply.

    Prices of the metal XPT=, predominantly used in autocatalysts, tumbled from the all-time high of $2,290 an ounce they hit in March 2008 as car demand slid in response to the economic slowdown.

    It fell as low as $732.50 an ounce last October, but has since recovered as demand for platinum jewellery in particular rose in China, bolstering prices.

    Bank of America says the fall in prices has led to cuts in miners' capital expenditure, which could lead to a supply shortfalls in future.

    "Margins of South Africa's platinum miners, which account for three-quarters of global output, have been squeezed and producers have reacted to the deteriorating operating environment, for instance by reducing spending," the bank said in a research note on Thursday.

    "Most notably, capital expenditure has been curtailed, which is set to reduce potential platinum supply growth."

    "On the demand side, platinum consumption is set to benefit from the unfolding rebound in the global automotive sector, which should lead to higher autocatalyst offtake," it added.

    Spot platinum was bid at $1,273 an ounce at 1038 GMT.

    (Source: Reuters)