Platinum drops as SA wage offer eases supply fears
London (Apr 18) Platinum prices fell to their lowest level in more than two weeks on Thursday after South Africa’s biggest platinum producers offered to raise wages for miners in a bid to end a strike that has curbed output.
Anglo American Platinum (Amplats) and Impala Platinum (Implats) said they proposed a settlement offer to end the debilitating strike, South Africa’s longest and most damaging mining strike in living memory.
The country produces 40% of global output for platinum, which is mostly used by the auto industry as catalytic converters or consumed as jewellery products.
Signs of progress in talks between the world’s biggest platinum producers and the Association of Mineworkers and Construction Union (Amcu) representing its 70,000 striking members had already pressured platinum prices after they hit a one-month high at about $1,470 an ounce on Monday.
"The strike was last bastion supporting the bullish case for platinum this week. That was the only thing holding the market up," said Frank McGhee, head precious metals dealer at Chicago commodities brokerage Alliance Financial LLC.
Platinum was down 1% at $1,418 an ounce by 2.44pm EDT (6.44pm GMT), reversing earlier gains prior to the news.
US NYMEX platinum contract for July delivery settled down $9.10 at $1,428.70 an ounce, with trading volume about 30% below its 30-day average, preliminary Reuters data showed.
Earlier on Thursday, platinum prices were underpinned by supply worries after talks between the leaders of South Africa’s striking union and the world’s three biggest platinum producers appeared to fail.
Traders said the latest offer from platinum producers, which proposes to meet Amcu’s demand to more than double miners’ basic wage to R12,500 a month over the next three years, was able to allay fears of a supply shortage.
Year-to-date, platinum was still up 3.5%, largely boosted by strike worries and signs of improving global auto demand.
Palladium also reversed early gains, falling 0.4% to $795 an ounce.
Trading of US precious metals will be shut on Friday for the Good Friday holiday.
Gold ETF holdings drop
Weaker platinum group metal prices also dragged down gold and silver prices.
Spot gold was down 0.6% at $1,295.01 an ounce.
US COMEX gold futures for June delivery settled down $9.60 at $1,293.90 an ounce.
Analysts said that gold’s fall below the psychological $1,300 level triggered further selling by momentum investors.
"Gold may be susceptible to further near-term losses," said James Steel, chief precious metals analyst at HSBC.
The yellow metal came under pressure on signs of weaker investment demand. Holdings in the world’s biggest exchange-traded fund, SPDR Gold Trust, fell 8.39 tonnes to 798.43 tonnes on Wednesday, the biggest daily outflow since late December.
Silver prices were unchanged from Wednesday’s close at $19.60 an ounce.
