Posts Tagged ‘Platinum Market’
Platinum’s Strength to be Boosted by Better Auto Sector Outlook
Platinum price rebounds to 1335 in European morning after plunging for 3 consecutive days. Technically, platinum’s outlook has turned more bullish after breaking the resistance of 1300 on September 11. That resistance level has now become support!
Similar to gold and silver, investment demand in platinum has been strong in recently months. According to CFTC, net speculative long positions in platinum futures have risen to a record high of 16521 contracts in the week ended September 15. According to ETF Securities, total platinum held by custodian has reached 355M oz, the highest level in more than a year, as of September 21. We worry that price will correct should investors sell what they have bought. In fact, such risk is higher in platinum than in gold. Investment demand in platinum is mostly by hedge funds and metal speculators who look for short-term profits as platinum does not possess the same safe haven appeal as gold.
However, we believe the improved demand/supply outlook in platinum should lend support to price in the medium- to long- term.
Auto-catalyst contributes 50% of demand for platinum. Therefore, outlook in auto sector is critical for platinum. After the disastrous first quarter, auto production and sales have started to recover in recent months with US’ recovery the most prominent. In Europe, production has also recovered after making a low in 1Q09. However, the risk is that the rebound may not continue as the government’s stimulus program ends. In fact, Europe is the most critical region affecting platinum. In 2008, Europe contributed 38% of world platinum demand and almost 40% of world’s auto production.
Gold price rebounds +1.3% to 1018 as USD resumes the decline. Against the euro, the greenback plunges to 1.48, the highest level since September 21. Against NZD, the dollar slides -1.1% after New Zealand surprisingly recorded current account surplus of NZD 0.12B in 2Q09.
Crude oil price also regains the 70 level amid strength in stock markets. In Asia, the MSCI Asia Pacific Index excluding Japan added +1% as the Asian Development Bank upgraded its economic forecasts in Asia to +3.9% in 2009, compared with a growth of +3.4% projected in March. In 2010, the growth projection is likewise upgraded to 6.4% from 6.0%. China is still expected to record the strongest growth as led by ‘aggressive monetary easing and the massive fiscal stimulus package’ by the Government. The nation’s economy is expected to grow by 8.2% in 2009 and 8.9% in 2010, up from the March forecast of 7% and 8% respectively.
In the UK, the FTSE 100 Index gains -1% to 5183. Germany’s DAX and France’s CAC 40 climb +1.4% and +1% respectively to 5751 and 3850.
Source: Oil N Gold Report
Platinum Stays Firm As August Car Sales Jumped
Platinum price remains firm after surging +2.4% Tuesday. Currently trading at 1290, the October contract attempts to make a new 3-month high above 1304 as spurred by strength in the precious metal complex as well as jumps in auto sales in both the US and China.
According to the China Association of Automobile Manufacturers, sales of passenger cars rose +90.2% yoy to 858K units in August. Together with 280K sales in commercial vehicles, total car sales in China surged +81.7% yoy to 1.14M units during the month. According to the organization, this is the 6th consecutive month that auto sales in China have reached 1M units. The outstanding result was attributed to tax reduction and subsidies provided by the government and signaled the worst of the economic slowdown has been over.
Released earlier, US light vehicles sales rose +25.45 mom and +4% yoy to 14.1M annualized in August as driven by the government’s cash rebate program.
Autocatalyst accounts for around 50% of platinum demand. Therefore, the global auto sector outlook is an important factor determining platinum price.
On the supply side, the hottest topic is strikes in South African mines. According to Impala, 50K oz of platinum production was lost after a 12-day strike at Rustenburg mine and a 5-day stock at the Marula mine. The National Union of Mineworkers began labor action on August 25 as workers and the company could not agree on a pay rise scheme. After negotiations between the 2 parties, workers agreed to return to work on September 8 and accepted the offer ‘in principal’.
While the issue seems to be over in Impala, the union remains undecided on Anglo Platinum’s offer. The world’s largest platinum producer offers a pay rise to 9-10% with minimum pay increasing to 4500 rand in the second year of the agreement.
Gold retreats to 994 after making an 18-month high yesterday. The precious metal has entered overbought territory after rallying for several days and investors prefer booking in gains for the moment. USD’ recovery also adds pressure to gold.
Crude oil remains stable at 71 in European morning. Today’s focus in on OPEC’s meeting as well as API’s inventory report after market close. The market anticipates another week of crude draw.
