London - Holdings of the world's largest platinum-backed exchange-traded fund, Johannesburg's NewPlat ETF, breached 1 million ounces for the first time last week, data from the fund showed, as a strike in the South African platinum sector prompted new buying.
NewPlat, launched less than a year ago by Absa Capital, grew within four months into the largest ETF of its kind as concerns over labour issues in the republic and the appeal of a rand-denominated fund fuelled buying from South African investors.
It currently holds nearly twice as much platinum as the second largest fund, New York-listed ETFS Physical Platinum.
The ETF saw its first monthly outflows in January and February after averaging inflows of 80,000 ounces a month in the second half of last year, worth some 1.2 billion rand a month at today's prices.
Inflows have since resumed, with the fund seeing additions of nearly 63,500 in March and nearly 56,000 ounces in the first days of April. Last week the fund recorded its biggest weekly inflow this year.
Platinum prices outperformed bellwether precious metal gold at that time, extending its premium over the yellow metal to its highest in more than two months at nearly $150 an ounce as a strike across the South African platinum belt ground on.
The action among miners at Anglo American Platinum, Impala Platinum and Lonmin, which began on January 23, is estimated to be costing 10,000 ounces a day in lost platinum output.
While consumers have been cushioned from immediate production losses by the availability of above-ground stocks of the metal, analysts say in the longer term the strike will tighten the market, potentially leading to price gains.
“For platinum, it's a positive from a price perspective that you have over half the South African platinum industry not producing, at a time when industrial demand is looking pretty good this year,” Mitsubishi analyst Jonathan Butler said.
“Also, because the Absa fund is rand-denominated, it gives some currency exposure at a time when in general the currency has been weakening. Those two things together explain the investor interest.”
Exchange-traded funds, which issue securities backed by physical stocks of a commodity, have proved a popular way to invest in precious metals in recent years. - Reuters