Standard Bank: SA loses 680 000 ounces of PGMs

An estimated 680 000 ounces of platinum group metals (PGMs), including 400 000 ounces of platinum, 225 000 ounces of palladium and 54 000 ounces of rhodium, have been lost since the start of the wage strike in the platinum belt. This is according to a report on commodities outlook by Standard Bank, which also showed that exchange-traded fund (ETF) holdings in platinum rose by 128 000 ounces, while palladium holdings have declined by 51 800 ounces. This comes as Absa’s platinum-backed ETF, NewPlat, which was listed on the JSE last year, reached the 1 million ounce mark last week. It is now valued at R15.3 billion and has become the largest platinum ETF in the world. Presenting the report in Johannesburg yesterday, Walter de Wet, Standard Bank’s commodities research head, noted that a 815 000 ounce deficit was likely. South Africa is the dominant platinum producer, and the metal is mainly used for making jewellery and producing catalytic converters to limit gas emissions in cars. Speaking on the impact of the strike, De Wet said: “Our analysis of above ground platinum and palladium inventory indicates that this is indeed high. As a result, on the balance, the bias may lie towards having to wait longer before PGM prices move higher on a sustainable basis.” De Wet forecast the platinum price would spike to $1 600 (R16 754) an ounce. He noted that to date platinum producers had been shielded from soft prices by the weak rand. The report expects a surplus in copper this year, and says the gold price will be lower than last year. The gold price is likely to reach $1 300 an ounce in the second half of the year, notes the report. A gold price recovery is likely to be muted given that the demand for the metal is set to be driven by physical demand rather than portfolio-type investor demand. – Dineo Faku