As consumption is poised to rise, stockpiles in warehouses tracked by the New York Mercantile Exchange have shrunk to the lowest since 2016. This year, supply will probably outpacing demand by 275,000 ounces, as jewelry and industrial uses climb, according to the World Platinum Investment Council. The deficit will widen from 15,000 ounces in 2017.
In South Africa, which accounts for more than 70 percent of global supply of platinum, an improving economic outlook has spurred a rally in the rand against the dollar. That raises the relative costs of producing metal, putting more pressure on South African mining companies already struggling to stay afloat, according to Shree Kargutkar, a portfolio manager at Toronto-based Sprott Asset Management, which oversees C$11.5 billion ($9.2 billion).
Investors are also piling into exchange-traded funds. On Jan. 16, the combined holdings of ETFs tracked by Bloomberg reached 2.54 million ounces, the highest since November 2015.
“That trend is definitely real, because it’s not one of those short-term blips that we see,” Kargutkar said. “Investors are looking at platinum as a store of value. In the short-term, that will be the primary driver.”
This article was provided by Bloomberg News.