LONDON (Reuters) - Platinum hit a record high for the 11th straight day on Thursday as a deepening power crisis in top producer South Africa forced another miner to forecast lower output and prompted investors to snap up the metal.
Spot platinum jumped to a high of $2,025 an ounce before dipping to $2,000/2,005 at 6:09 a.m. EST, against $1,985/1,995 late in New York on Wednesday. The metal has jumped 33 percent this year on the top of 37 percent surge in 2007.
The power crisis in South Africa, which accounts for 80 percent of global platinum output, continued to affect mining operations. Mines were shut for five days in late January and are now getting only 90 percent of normal electricity supply.
“Definitely the situation is serious and this is getting reflected in the price. We will have shortages this year and probably the next year,” said Frederic Panizzutti, precious metals analyst at MKS Finance.
“The supply-demand balance was already extremely tight. What has happened recently and what is going to happen for the next two to three years are definitely going to widen the gap and additional shortages are going to tighten the market further.”
State utility Eskom is considering a complete power supply buy-back from all of the country’s aluminum smelters plus one in Mozambique for the balance of 2008 as part of a multi-strand approach to solve the country’s power crisis, senior sources close to Eskom told Reuters.
Eskom is due to hold a press briefing at 7 a.m. EST at which the utility will explain its multi-strand approach, which will involve reducing power demand among all industrial consumers and better managing its generation and fuel supply, they said.
“With no end in sight to the South African power crisis it is difficult to be anything but bullish, with platinum potentially able to gain a further $600-$800 over the next 2 to 3 months,” said James Moore, analyst at TheBullionDesk.com.
aluminum rose more than 4 percent to a 7-month high on the London Metal Exchange, driven by fears of reduced supply owing to power shortages in South Africa and China.
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.
Impala Platinum (IMPJ.J), the world’s second biggest platinum producer, said its output in the full year to end-June would decline to just under 2 million ounces, compared to 2.026 million ounces in 2007, due to the power crisis.
Other producers have also lowered forecasts. Anglo Platinum (AMSJ.J), the world’s top producer, said this week electricity problem alone would cut output by 120,000 ounces in 2008, and had cost 30,000 ounces in lost output since January.
Production at South Africa’s Northam Platinum (NHMJ.J) fell 16.5 percent to 150,755 ounces during the first half from July to December. For the second half to end-June, it said production would match the first half if the electricity crisis restricted the company to continue using 90 percent of normal power.
Yukuji Sonoda, precious metals analyst at Daiichi Commodities in Tokyo, said automakers were accumulating platinum stocks to last up to six months on fears of further price rises.
“Automobile companies are rushing to buy platinum. That’s the most important point. They are unwillingly buying platinum ingots,” he said, also pointing to investor purchases.
In other metals, gold gained to hover below a record high of $936.50 hit in early February. Spot metal was last quoted at $910.10/911.00 an ounce, against $906.70/907.50 in New York.
Industry-sponsored World Gold Council said on Wednesday global gold demand in the fourth quarter fell 17 percent year-on-year to 843.0 tonnes because of a sharp drop in jewellery buying by top consumer India.
Palladium rose to $436/440 an ounce from $430/435, while silver edged up to $17.30/17.35 an ounce from $17.28/17.33 in New York.
(Additional reporting by Lewa Pardomuan in Singapore)
Reporting by Atul Prakash; editing by David Evans