Platinum Strike To Drive Up Price Soon; On-Ground Stocks Nears Expiry

Distressed at the prolonged eleven-week long platinum strikes in South Africa, the price of the black metal may likely shoot upward if the strike persists.

JOHANNESBURG (Scrap Monster) : Distressed at the prolonged eleven-week long platinum strikes in South Africa, the price of the black metal may likely shoot upward if the strike persists. With more than 75,000 mine strikers downing their tools from Jan. 23 at the top three Platinum companies of SA at Rustenburg, the production of platinum has almost halted in the country. Due to the lack of production, the platinum market has not seen any movement in the price of the metal for long, nor upward or downward yet. This indicates the decline of demand for platinum among global consumers. The shortage of the metal seems to have not affected the open market to impact on its price.

According to the researcher at the Noah Capital Markets, Mr. Michae Kavanagh,the absence of movement of price of platinum indicates that there is not supply crunch reporter as yet. But if the strike prevails for long, the platinum price is expected to sky-rocket to an unexpected level, creating a rise of demand.

Michael Kavanagh, a metals and mining analyst from Noah Capital Markets told Moneyweb that if the price doesn’t move, it means that there is no shortage in supply. When analyzing the movement of platinum price over the last three months, it is found to have moved just marginally from R 1,350 to R. 1,450 in the last three months. However, he anticipates that the condition may change in near future. South Africa is the world’s largest producer of platinum and the three top platinum producers in the world, including the Anglo American Platinum, Impala Platinum and the Lonmin is the worst affected miners owing to the industry wide strike.

The companies had beforehand saved the stockpiles with them to counter the strike which had ensured the assurance of supply during the days when the production was halted. Now that the companies have announced that the stockpiles have neared its expiry, the entire global economy is under threat. According to Kavanagh, it seems like the SA miners were stocking the metal rather than producing. Due to the lack of mining operations at Rustunburg for months, they have also become unsafe. It will cost more to restore the operations after the end of strike. 

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