Stronger USD Pushing Platinum (NYSEArca:PPLT) Down

$PPLT, $IMPUF, $GLD, $SLV

Platinum futures trading on the NYMEX market in New York declined for a 4th day running Tuesday to 996.80, pushed down by a stronger USD, weakness across the precious metals complex, and the signing of a wage deal in Key producer South Africa.

YTD Platinum’s price is up more than 14%  thanks to predictions of another annual market deficit and the threat of labor action in South Africa which is responsible for 73% of global annual supply.

Tuesday South Africa’s National Union of Mineworkers entered into a two-year wage deal with Impala Platinum (OTCMKT:IMPUF) following last week’s strike involving 500 workers at the company’s refinery. The agreed pay hike for workers are in line with inflation in the African nation and nowhere near demands previously made in the sector.

In its latest quarterly report the World Platinum Investment Council (WPIC) adjusted the supply deficit forecast for Y 2016 upwards by 16% or 65,000 oz to 520,000 oz, from 455,000 oz previously, mostly on the back of lower than expected recycling growth.

Y 2016 is set to the 5th annual year of market shortages for Platinum, used mainly in jewelry and auto-catalysts.

Annual supply from South Africa has fallen from a peak of nearly 6-M oz a decade ago to an expected 4.2-M oz this year

Total mining supply was forecast to fall 3% to just under 6-M oz. Annual supply from South Africa has fallen from a peak of nearly 6-M oz a decade ago to an expected 4.2-M oz this year.

A significant factor that has been putting a lid on price rises is the amount of above ground stocks of Platinum, usually vaulted investor holdings, but the WPIC says these have more than halved over the 5 years of supply deficits and is expected to have dwindled to 1.87-M oz this year. The authors of the report note that “positive sentiment has reduced the propensity of holders to sell Platinum to meet deficits.”

South African mine production figures for July released today showed PGM output fell by 10.8% compared to June and 8.2% Y-Y as miners close down unprofitable mines and safety stoppages halt operations.

Gold and Silver declined Tuesday on the COMEX

• Dec Gold finished Tuesday’s session down 42.80 (-3.3%) to 1269.90 oz
• Dec Silver closed 1.05 lower (-5.6%) to 17.78/oz
• The Gold/Silver ratio was at ~71.4, compared to yesterday’s pit trading closing ratio of ~69.

Stay tuned…

  COMEX, Gold, IMPUF, jewelry, miners, NYMEX, PGM, platinum, PPLT, price, sentiment, silver, South Africa, USD, WPIC

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Paul Ebeling

Paul A. Ebeling, polymath, excels in diverse fields of knowledge. Pattern Recognition Analyst in Equities, Commodities and Foreign Exchange and author of “The Red Roadmaster’s Technical Report” on the US Major Market Indices™, a highly regarded, weekly financial market letter, he is also a philosopher, issuing insights on a wide range of subjects to a following of over 250,000 cohorts. An international audience of opinion makers, business leaders, and global organizations recognizes Ebeling as an expert.

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