Business | Markets
Platinum surges to record $2,060 on panic buying
Platinum surged three per cent to hit a record high for the 12th successive day on Friday, with acute power problems in top producer South Africa encouraging investors and consumers to buy up the metal.
- Reuters
- Published: 23:28 February 15, 2008
London: Platinum surged three per cent to hit a record high for the 12th successive day on Friday, with acute power problems in top producer South Africa encouraging investors and consumers to buy up the metal.
Spot metal hit a high of $2,060 an ounce before easing to $2,055/$2,065 at 1441 GMT, against $1,997/$2,007 in New York late on Thursday. It has jumped more than 34 per cent this year on the top of 37 per cent gains recorded in 2007.
"It's panic, panic, panic. If you are a platinum consumer, you are not going to sleep at night," said Robin Bhar, metals analyst at UBS Investment Bank.
"The price move shows you the unprecedented nature of the market. People can see actual physical shortages somewhere down the road and prices moving away from them. It's not a case of just speculation. There is genuine demand coming through."
South Africa, which accounts for 80 per cent of global platinum supply, has been hard hit by power cuts since early January, forcing mines to shut for five days last month.
South Africa's state power firm Eskom said on Thursday it would increase coal purchases and buy back electricity from those industrial users able to reduce consumption under a plan to address crippling shortages.
Analysts say the platinum deficit could widen to 400,000 to 500,000 ounces by the end of 2008, compared with about 265,000 ounces in 2007. The market had a surplus of 65,000 ounces in 2006 following seven successive years of deficits.
"Platinum supplies are heavily dependent on this market, and the delicate power supply situation as well as concerns about mine safety leave mine output extremely susceptible to potential disruptions," Barclays Capital said.
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