Platinum Funds Suffer Record Losing Run as Metal Pummels Lonminby and
Investors cut holdings in exchange-traded funds backed by platinum for a record 13th day, with tumbling prices of the precious metal also driving shares of Lonmin Plc, the third-biggest producer, to an all-time low.
Holdings in the ETFs dropped 0.4 percent Monday to 76.5 metric tons, the lowest since November 2013. The assets have dropped 13 percent since Sept. 21, when Volkswagen AG admitted to systematically cheating on air pollution tests for cars with diesel engines, raising concern demand for platinum from auto makers may suffer. The metal is mainly used in devices that curb harmful gases from vehicles, and particularly in diesel types.
“With platinum, there’s a lot of psychological issues,” Bart Melek, the head of commodity strategy at TD Securities in Toronto, said in a telephone interview. “We’re worried about the sustainability of the diesel market, which primarily uses platinum as a catalyst.”
The collapse in platinum prices, down about 40 percent since the middle of last year, has become a threat to Lonmin, which sank to a record low for a second day on Tuesday. Investors fled the stock, pushing it down as much as 37 percent in London trading. Loses have reached 95 percent this year, after the producer said it would sell billions of shares at a fraction of the market rate to try to restore its finances.
“The platinum ETF story is one that reflects a general malaise in the sector, with demand worries and short-term oversupply among the factors worrying investors,” Jonathan Butler, a precious metals strategist at Mitsubishi Corp. in London, said by phone. “Fund managers are losing patience with the metals. They don’t think there is going to be a lift in demand.”
Platinum futures for January delivery slipped 1.6 percent to settle at $899.50 an ounce at 1:10 p.m. on the New York Mercantile Exchange, the ninth straight loss, the worst streak since August 2014.
Gold futures for December delivery added less than 0.1 percent to $1,088.50 an ounce on the Comex in New York, after touching $1,084, the lowest since Aug. 7. Silver also fell on the Comex, while palladium rose on the Nymex.
Assets in the biggest exchange-traded product backed by gold fell on Monday to the lowest level in seven years. Holdings in the SPDR Gold Trust slid 0.4 percent to 666.11 metric tons, the least since September 2008, the month Lehman Brothers Holdings Inc. collapsed.