Platinum Steals the Spotlight
Within the precious metals complex, platinum has stolen the show yet again overnight. It has now been up in five of the past six trading days, has rallied $150 in that time period, and is above gold for the first time since March 2012. Overnight, Anglo American Platinum, the world’s largest producer, announced the findings of a year-long review aimed at restoring profitability to the beleaguered company’s South African operations. The report’s analysis caused Anglo American Platinum to declare the closure of four unsustainable high-cost shafts. This move will decrease annual production by 400,000 ozs leaving a baseline annual production target of 2.1 – 2.3 million ounces. Since the market consensus for cuts was about 250,000 toz per annum, the announcement had a very real impact on the platinum price and it is up $30 on the day thus far.
Given that platinum has had such a big move in the last week, offers were waiting around $1,700 where the market appears to be technically capped for the time being. The decreased production has also caused platinum lease rates to rise. It remains to be seen if this will result in the market becoming backwardated, the phenomenon in which the spot price becomes higher than the future price of a given commodity.
