Platinum price to remain strong into 2008

Platinum prices are expected to maintain their current high levels into next year.

The market saw a record high this week with the metal trading at $1,510 oz and in addition, lease rates are rising rapidly.

The one month rate is trading at over 6%; three months in excess of 7% and twelve months at between 7% and 8%.

While platinum is in strong demand, there is also uncertainty over supply and reports that there may be a delay in the issue of platinum export licences in Russia.

Demand for the metal is currently being bolstered by China, where the jewellery sector has consumed much of the inventory that had built up during 2006.

Last year, Chinese jewellery accounted for 10% of world platinum industrial offtake and recent research from GFMS, the precious metals research consultancy, suggests that platinum jewellery demand in China has been strong throughout the first nine months of this year and that Chinese consumers have adjusted to higher prices.

Demand for platinum in other industrial sectors remains high, particularly in the automotive, electronics and glass industries, although an economic slowdown during 2008 could alter the picture.

In addition, recent figures on Exchange Traded Funds show that holdings in the London-based ETFS Physical Platinum security have increased from 1.6 tonnes in the middle of November to 3.6 tonnes in mid-December

Production of the metal is set to increase in 2008, with both expansion and new projects in South Africa and elsewhere.

World mine output in 2008 could exceed that of 2007 by half-a-million ounces, or more if Anglo Platinum succeeds in making up for its shortfall this year.

It is therefore possible that the platinum market will move into a surplus during the course of next year but in the short-term prices are likely to continue their upward movement.