London - Platinum holdings in physically backed exchange-traded funds have hit a record high after fresh inflows into funds listed in London and Johannesburg, and are set to rise further as a strike in major producer South Africa grinds on.
The world's largest platinum-backed ETF, NewPlat ETF reported an inflow of around 4,000 ounces on Monday, taking its holdings to a near seven-week high at 908,811 ounces.
On the same day, London-based ETFS Physical Platinum reported an inflow of 4,505 ounces, taking its holdings to just under 325,000 ounces.
Platinum ETFs, popular investment vehicles which issue securities backed by physical metal, now hold a record 2.215 million ounces, equivalent to around seven months of supply.
The white metal, used in catalytic converters for automobiles, has attracted investors as a strike over wages in the South African platinum belt edges towards a seventh week, analysts said.
“In terms of ETFs, you've got to think that the longer the strike goes on, and as above-ground stocks are consumed, it's got to be positive,” Citi analyst David Wilson said. “People must be thinking that prices are going to rise.”
Platinum prices initially reacted only marginally to the strike, but by last week they had risen to a six-month high at $1,486 an ounce, up 8 percent from the start of the year.
Preliminary orders for the NewPlat ETF, which is listed in South Africa by Barclays unit Absa Capital, suggest its holdings will hit a record high around 944,000 ounces later this week.
NewPlat is less than one year old, having launched in April 2013, but had become the world's largest platinum ETF in just four months.
Analysts say the fund proved popular with South African investors seeking exposure to platinum without having to buy troubled mining stocks, which have suffered from a toxic mix of rising costs, labour unrest and weak demand for their products.
Absa's head of investments, Vladimir Nedeljkovic, said new inflows into the fund largely represented buying by existing, rather than new, clients.