RE: $1,610/ounce: another record platinum pricePLATINUM AT $1,600/OZ IN ‘08
Haywood increases PGM price rise forecast
Haywood Securities lifts its price forecast for PGM metals in 2008 to 2010 but says uranium fundamentals have remained unchanged over the past few months.
Author: Tessa Kruger
Posted: Wednesday , 23 Jan 2008
JOHANNESBURG -
The platinum price is expected to rise to $1,600/ounce in 2008 and $1,200/ounce in 2010 as continued dollar debasement, supply disruptions, continued strength in autocatalyst demand and "potential issues around Jacob's Zuma's (expected) election" as South Africa's president are expected.
Canadian investment dealer Haywood Securities has increased its PGM price forecasts in a new research report from platinum prices of $1,200/ounce in 2008 and $900/ounce in 2010, rhodium prices of $3,750 to $6,500/ounce in 2008 and $2,000 to $3,000/ounce in 2010. Palladium price forecasts have remained flat at $400/ounce in 2008 and $375/ounce in 2010.
This comes as the dealer considered current record trading prices and fundamental drivers of PGM prices.
Haywood's mining team said the predominant use for PGMs remained autocatalysts. Progressively tighter constraints on auto emissions and strong growth in global auto sales ensured a robust market for the metals group. Potential for the substitution of PGMs in autocatalysts existed, but this substitution by other metals was still a number of years away.
"A more immediate concern is jewellery consumption, as high prices may continue to negatively impact sales in Japan. However, China's burgeoning middle class is supporting global jewellery sales as much as it has supported every commodity in the world."
Haywood said the "central issue of PGM fundamentals" was supply constraints in South Africa which provided 80% of global supply.
PGM industry specialist Johnson Matthey was expecting a global decline in platinum supply of 2% in 2007 and a market deficit for the year. Supply issues have also resulted in reduced production guidance for 2007 from major producers such as Anglo Platinum. The reasons for supply issues included a shortage of and high turnover of staff, measures taken to address safety issues in the industry and labour disruptions related to safety concerns.
"Another important supply factor related to the recent election of Jacob Zuma as head of the ruling African National Congress (ANC). The ANC is assured of victory in the 2009 election and the question is whether Zuma will achieve the party unity he claims to seek, or, whether his considerable "left-of-centre" roots and supporters will lead to unrealistic mining royalties and taxation."
PGM prices were ‘highly sensitive' to developments around Zuma as a steep increase in the price with his election as partly leader demonstrated, said the report. But these concerns could evaporate as the hysteria around the election of President Luiz Inácio Lula in Brazil disappeared when he proved a "stellar leader" for that country.