Weekly Updates
Platinum
| Current Price | 1-Week Change | 1-Year Change |
|---|---|---|
| $1,940.00 | +$94.00 | +$612.00 |
The platinum price plummeted along with most commodities last week as the US dollar retraced some of its recent losses on the market’s perception that the US Fed may be nearing the end of its rate cut cycle after reducing short rates by just 25 basis points. Platinum dropped to $1,835 an ounce, nearly $250 below levels of just two weeks ago. As the dollar appeared to be stabilizing and crude reached new highs of $122 a barrel, fresh buying and maybe a short covering rally drove platinum back over $1,950 an ounce.
US auto sales for the four months of 2008 were lower by 7.7% versus the comparable period of 2007 as higher fuel prices, more difficult credit approvals and increasing fears of recession and possible job losses deterred buyers. Sales of SUVs and light duty trucks reported the greatest declines, while sales of smaller, more fuel efficient cars performed better. For the first quarter of 2008, vehicle production has fallen by 9.4% from the same period last year. Auto sales are now running at a seasonally adjusted rate of 15.1 million units in the US, off from the 16 million of 2007, and a level not seen since 1994.
Lonmin posted a 77% gain in its own refined platinum production in its second quarter ending in March at 128,124 ounces against the comparable period of last year of only 72,453 ounces. The sharp relative increase in production was in comparison to a particularly poor second quarter in 2007 when the unplanned re-build of its Number One furnace during the December through April period impacted results. In this three month period through March 2008, production was adversely affected by the five-day power outage in January which cost the company 15,000 ounces of platinum outturn, but also by a 16% drop in throughput and a 6% decline in grade levels. For the first half year, Lonmin produced 282,650 ounces of platinum in concentrate and sold a similar 288,963 ounces of platinum during the six month period. Management has reduced its full year sales target for a second time this year, down to 775,000 ounces of platinum from its 860,000 ounce target previously. It should be noted that its first six month results show platinum production already well-shy of the half way mark at only 37% of its projected target. In comparison, Lonmin produced just over 1 million ounces of platinum in concentrate in its fiscal year ending in September 2006.
In its first quarterly report, Anglo posted a 24.2% decline in platinum production with 428,600 ounces as compared to 565,100 ounces in the same period of 2007. Management cited several causes for the sharp decrease including massive underground flooding which occurred at its Amandelbult mine, its second largest producer, in January that affected some 75% of its capacity, the closure of its largest smelter at Polokwane because of a leak in the furnace wall that damaged some of the electrical equipment resulting in the shutdown of the smelter for a six-week period, and power outages and rationing that has already resulted in the loss of 30,000 ounces of platinum due to energy-related closures in January.
Anglo Platinum announced its full year results ending December 2007 with a 12.1% decline in its sales of refined platinum, down to 2.474 million ounces for the year. Production fell by 340,000 ounces during 2007 from the 2.816 million ounces of platinum posted in fiscal 2006. Management at Anglo is now projecting a further decline in refined platinum for fiscal 2008 to 2.4 million ounces, estimating that ongoing power rationing by Eskom could cost a total of 120,000 ounces of platinum in 2008. Along with the probability of intermittent mine closures for safety reasons and the disappointing first quarter, output at Anglo this year could fall short of its targeted 2.4 million ounces or more than 400,000 ounces below 2006 levels.
