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JM wary of platinum supply disruption Posted: Mon, 14 May 2007 [miningmx.com] -- THE recently launched platinum-backed exchange traded funds (ETFs) may increase planning difficulties among primary producers of the metal, said Johnson Matthey (JM), the UK-based semi-fabricator and marketing firm. "ETFs represent an easier way to get more money into the pot so they aren't all bad," said Bill Sanford, head of JM's precious metals division. "My slight worry is that if investment becomes too large, there's pain down the line for producers and consumers," he said. The fear is that producers will not be able to predict which way the price of platinum will move, Sanford said. Earlier this month, Zurich Cantonal Bank (ZKB) launched a platinum-backed ETF in Europe while in April, London-based ETF Securities listed a similar fund on the London Stock Exchange providing investors to a platinum, palladium, gold, silver and a precious metals basket. The launch of the ETFs drew an extraordinarily aggressive response from some platinum producers which said they would not provide metal into them. The volumes of both ETFs products have been relatively low but JM believed they may nonetheless disturb the platinum market which had moved into surplus for the first time in eight years. However, the platinum surplus was described by JM, in its annual review launched on May 14, as 'nominal'. Primary platinum production from South African powered expansions increased to 6.79 million oz, only slightly in excess of global demand of 6.78 million oz, which represented an 80,000 oz increase year-on-year. JM annual review author, Mark Bedford, also said there was higher confidence in the ability of smaller platinum producers, such as Aquarius Platinum and ARM Platinum, a division of JSE-listed African Rainbow Minerals, to start supplying the market. "The investment climate has become very favourable for expansion and we expect eastern Bushveld platinum prospects, previously in doubt, to produce in the long-term," Bedford said. Commenting on the price outlook for platinum in 2007, JM said the metal would trade between $1,200 to $1,400/oz. However, the demand stimulated from the ETFs could introduce new volatility, Bedford said. "The growing surplus may ease the pressure on the price," he said of the platinum price. "But the ETFs could mop up supply. "There is potential for the platinum price to spike over $1,400/oz if the ETFs are more successful," he said. Click Here to subscribe to our daily newsletter
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