Platinum Deficit to Last on Africa Strikes, Norilsk Nickel Says

Strikes in South African mean global platinum supplies may fall short of demand this year, according to OAO GMK Norilsk Nickel, Russia’s nickel and platinum producer.

“Our estimate is that South Africa will lose 350,000 to 400,000 ounces of production this year and that a surplus in the market would be immaterial if any,” Yuriy Sobolev, director of sales, said in response to questions by e-mail. The company initially expected a platinum surplus in 2012, he said.

Platinum futures rallied to the highest in more than five months yesterday on concern that supplies will be disrupted by labor unrest in South Africa, the world’s largest producer of the precious metal. Strikes and pit closures meant mining companies extracted 380,000 ounces less than they could have this year, equivalent to about 6 percent of global output, Deutsche Bank AG estimates.

Platinum has risen 18 percent from the start of the year on London Metal Exchange. Nickel, which makes up the bulk of Norilsk’s output, has fallen 10 percent to $16,748 a ton and copper has advanced 6.5 percent.

Norilsk doesn’t expect a further slump in commodities markets in the near future as metal prices are too low for production to keep pace with consumption, Sobolev said. “At $16,000 a ton of nickel, 30 percent of the producers are most likely making losses.”

Nickel consumption has grown at about 3 percent to 4 percent a year, slightly better than forecast, Sobolev said. It is likely to grow 4 percent this year “and maybe slightly better in 2013,” mostly from the stainless steel sector in China and India, he said.

“It’s an exaggeration to label it as a depression,” even with current growth rates in the steel industry lower than average, he said. Nickel demand is 30 percent higher than in 2009, which was “the lowest point,” Sobolev said.

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