Platinum Prices to Rebound as Demand Outpacing Supply, CPM Says

Platinum prices that are headed for their worst quarter in almost five years probably will rebound in the last three months of 2013 as labor unrest disrupts output, commodity researcher CPM Group said.

The precious metal may average $1,620 an ounce in the fourth quarter, compared with $1,369.50 at close of trading on June 21, New York-based Erica Rannestad, an analyst at CPM, said in an interview before the release of the company’s annual Platinum Group Metals Yearbook. Prices averaged $1,555 last year. Global supplies of newly refined metal will trail demand for a second year, she said.

Production declined as labor strikes and safety concerns disrupted mining in South Africa, the world’s biggest producer, creating a deficit in 2012 that was the first after nine straight years of surplus, according to CPM. Higher costs and lower prices are prompting operators including Anglo American Platinum Ltd., the world’s largest miner of the metal, to consider cutting back operations and reduce workers.

Fabrication demand remained little changed at 7.3 million ounces last year from a year earlier, CPM said. The increase in demand in Japan and higher jewelry sales in China was offset by a slowdown in use by European automakers.

The metal tumbled 13 percent this quarter through June 21, heading for the biggest slump since the three months ended Sept. 30, 2008.

Global palladium supplies fell 5.5 percent to 8.6 million ounces last year, while fabrication demand rose 5 percent to 8.5 million ounces, helped by strong sales of passenger vehicles in U.S., the report said.

The rhodium market dropped into a 43,000-ounce deficit last year, after being in surplus since 2009, mainly as fabrication demand grew amid a drop in supplies, CPM said.

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