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» JSE:IMPALA PLATINUM HOLDINGS LIMITED:
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SA platinum shares rocket higher
Allan Seccombe
Posted: Mon, 06 Nov 2006

[miningmx.com] -- SOUTH AFRICAN platinum shares ran up hard on Monday as Impala Platinum split its shares and the general sector continued its run that started on Friday when the market moved higher on speculation there will be an exchange-traded fund for the metal as well as increased pressure on supplies.

Implats signalled to the market in August it would have an eight-for-one split of its shares on 6 November. The shares closed at R1,355 on Friday, meaning they opened Monday’s trade at R170 each.

The shares quickly ran up to a day high of R185 before ending the session at R182.50 on nearly five million shares traded.

ETF rumour should continue to underpin the market
“Traditionally investors are supportive in the short to medium term of a share split,” Graeme Korner from Standard Financial Markets said on the Classic Business Day week-nightly radio show.

Fundamentally nothing changes in a company that splits its shares. The reason for such a split is that generally investors are finding the shares are too expensive and avoid buying them, David Shapiro from Sasfin said on the Moneyweb Power Hour.

Anglo Platinum ran up too, but on much smaller volumes. The company is 75% owned by Anglo American, which means it is a relatively illiquid stock.

Anglo Platinum ended the day up six percent at R880 on just 430,000 shares traded.

The JSE platinum sector ended up nearly seven percent. Aquarius Platinum and Northam rose 4.9% and 4.4% respectively.

On Friday, the price of platinum pushed to $1,225/oz on speculation that an exchange-traded fund backed by the metal would be launched soon. Such an instrument would draw physical metal out of an extremely tight market.

“Barring any official confirmation, the rumours of a platinum exchange-traded fund should continue to underpin the market,” Standard Bank said in a report.

“The interim review by Johnson Matthey Plc on the platinum market scheduled for release on 14th November should also provide fundamental support to the metal as the world’s largest distributor of platinum group metals is likely to indicate industrial demand for the precious metal will once more outstrip supply in 2006 for the eighth consecutive year,” it said.
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Platinum was last trading at $1,185.

Another factor pushing the platinum price higher are indications of increased sales of diesel-powered light vehicles, which use platinum instead of palladium in their autocatalysts.

Johnson Matthey released a report last week on increasing purchases of Mercedes Benz’s diesel vehicles in the United States where people are looking for cheaper fuel options. In October, Mercedes recorded its best sales in the US of more than 20,000 vehicles.

“The growth in demand among consumers for fuel efficient and low emissions vehicles has been seen at other automakers over the course of October, with General Motors also announcing an increase in sales during the month,” Johnson Matthey reported.

Johannesburg-based Steve Shepherd at JP Morgan, said if diesel vehicles became as popular in the US as they were in Europe it would put further strain on the platinum market.

“We have expressed a view that the mines may struggle to keep pace with demand growth, in this event. In this scenario we believe the price of the metal may have to rise to reduce jewellery demand in the price-sensitive Chinese market,” Shepherd said in a note.

“The early results of Merc's diesel launch in the US fuels the possibility of this scenario coming to pass, in our view,” he said.