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Platinum EFT demand continues to thrive

David McKay | Thu, 03 Oct 2013 11:06
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[miningmx.com] – DEMAND for platinum-backed debentures, a form of exchange traded products (ETNs), has been unstinting since they were first launched on the JSE in April with product originator, Absa Capital, announcing today the purchase of just under 8,000 more ounces.

Some 800,000 NewGold Platinum Debentures were issued, equal to 7,985 ounces of platinum at a price of R140.60 per additional debenture, said Absa Capital.

That takes a total issued since April26 when they were first launched to 68 million debentures referencing some 678,798 ounces of platinum, equal to 16.5% of South African platinum production in 2012 of 4.1 million ounces.

Speaking in May, Johnson Matthey said there was a market deficit in the platinum sector of some 375,000 ounces while primary platinum supply totalled 5.64 million oz.

In September alone, some 8.8 million NewGold Platinum Debentures had been issued by Absa Capital referencing 87,862 ounces which is more than South Africa's average weekly production in 2012 of just under 79,000 ounces.

The popularity of the metal-backed debentures stems from a belief that there are risks to South Africa supply of platinum evidenced by a strike by workers of the Associated Mineworkers & Construction Union at the mines of Anglo American Platinum, the world's largest platinum producer.

Commenting on the platinum market in a recent review, French company Natixis said yesterday that tensions between miners and producers were likely to remain high. While it expected the platinum market to remain under pressure, there would be "... improvement and higher prices in 2014 and 2015," it said.

From a demand perspective, the European car market should improve on the back of a local economic rebound as austerity measures are relaxed modestly.

"Increased automobile demand from Europe, coupled with a reduction of mined platinum supply, should help platinum prices to reach $1,580/oz in 2014, followed by $1,700/oz in 2015," it said.


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