Platinum reaches new lifetime high

London: Platinum prices hit a record high for the ninth straight trading day yesterday as concerns deepened over output losses in top producer South Africa due to a power crisis, analysts said.

The rally, which has sent prices up 30 per cent in just three weeks, gained pace after Anglo Platinum, the world's biggest producer, said on Monday the power problem alone would cut output by as much as 120,000 ounces in 2008. It had already cost 30,000 ounces in lost output this year.

Platinum rose to a high of $1,965 an ounce before falling to $1,940/$1,950 by 1304 GMT, against $1,933/$1,941 in New York late on Monday.

The market nervously awaited financial results of Northam Platinum and Impala Platinum, the world's second-biggest producer of the metal, tomorrow for more cues on production losses.

Chronic problem

"It's a chronic problem. It has been a deficit market for many years and it looks like it has returned to a significant deficit market again," said David Holmes, director of metals sales at Dresdner Kleinwort Investment Bank.

"The market is really tight. The only way that the shortfall can be made up is by a decline in industrial or jewellery demand," he said, but added: "Jewellery demand is considered the more price sensitive of the two."

Mines across South Africa, which accounts for four-fifths of the world's supply of the metal, ground to a halt for five days at the height of the power crisis last month. Platinum is used in jewellery and auto catalysts to clean exhaust fumes.

Negotiations were under way for South African state-owned power utility Eskom to buy surplus electricity from local producers as part of its bid to solve the nation's energy crisis, public enterprises minister Alec Erwin said on Monday.

A spokesman at Eskom said the company was in discussions with the government to ensure sufficient funding to meet its expansion programme.

"We still target $2,000 this week, and while a significant retracement can't be ruled out, it hasn't paid to bet on one," said Robin Bhar, analyst at UBS Investment Bank.

Analysts say the platinum deficit could widen to more than 400,000 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.