Platinum Rises on Outlook for South Africa Supplies; Gold Drops

By Claudia Carpenter

Feb. 12 (Bloomberg) -- Platinum rose in London for a fifth day to a record on speculation power shortages in South Africa will keep pressure on supplies at a time of increased demand from automakers. Gold fell.

Platinum for immediate delivery gained $11.50, or 0.6 percent, to $1,950.50 an ounce as of 10:52 a.m. in London after earlier rising to $1,972.75, an all-time high.

Power cuts in South Africa may cause global platinum supplies to fall short of demand by as much as 700,000 ounces this year, UBS AG analyst John Reade estimated last month. Platinum prices rose 34 percent last year after a supply shortfall of 265,000 ounces, according to London-based metals trader Johnson Matthey Plc.

``People want to see $2,000 and it could happen any day that power will fail again,'' said Mark Augustynak, a trader at Natixis Commodity Markets Ltd. in London.

Eskom Holdings Ltd., South Africa's state-owned power utility, has begun a study on its financial ``sustainability'' after its credit ratings were placed on ``negative watch'' by Standard & Poor's, the Johannesburg-based company said today. Eskom told miners to shut their mines for five days last month because it couldn't guarantee supplies.

Assets in platinum-backed shares created by ETF Securities Ltd. climbed 6.6 percent yesterday to a record 262,743 ounces, figures on the company's Web site showed.

Automakers, which are the biggest buyers, use platinum in catalytic converters to reduce vehicle emissions.

`No Alternative'

They have ``no alternative'' but to keep buying, said Wolfgang Wrzesniok-Rossbach of refiner Heraeus Holding GmbH. ``They can't stop production of cars,'' Wrzesniok-Rossbach, head of marketing and sales at Heraeus, said in a phone interview from Hanau, Germany, today.

Platinum prices have climbed 28 percent this year while the UBS Bloomberg Commodity Index of 26 raw materials gained 8.6 percent.

Automakers used a record 4.2 million ounces of platinum last year, 61 percent of the total and up from 4.1 million in 2006, according to Johnson Matthey.

Johannesburg-based Anglo Platinum Ltd., the world's largest producer, yesterday said it expects its output to drop to 2.4 million ounces this year from 2.47 million ounces last year.

Palladium for immediate delivery fell $1 to $439.50 an ounce after earlier today advancing to $448.50, the highest since September 2001. Palladium is also used in catalytic converters to remove noxious gases from car emissions and South Africa accounted for 34 percent of supplies last year, according to Johnson Matthey.

Gold fell $1.30 to $922.20 an ounce and silver advanced 7.75 cents to $17.5625 an ounce.

To graph technical gauges for platinum: Moving Averages Relative Strength Index Fibonacci Back Test Technical Gauges

To contact the reporter on this story: Claudia Carpenter in London at ccarpenter2@bloomberg.net or ccarpenter2@bloomberg.net

Last Updated: February 12, 2008 06:20 EST