View Full Version : Platinum price has production implications

10-25-2008, 05:36 AM
From Johnson-Matthey:

Platinum production is being hindered by the current metal price basket of US$850/oz, it has been reported.

According to Mineweb, analysts at RBC Capital Markets believe that platinum production is largely unresponsive once the price drops below a certain level - and then deteriorates markedly when prices fall further.

"Once we dip below USD 1,100/oz, we find hardly any growth potential from the current 5 million ounces a year production base, and once the metal price basket dips below USD 1,000/oz, we see current output declining drastically," the company is quoted as saying by Mineweb.

Given the current price of platinum, RBC Capital Markets believes the platinum industry's production capacity is "hinging on a knife edge".


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10-25-2008, 10:34 AM
I've always loved the plain vanilla, ambiguous wording in most of these reports. They almost always confirm the preexisting bias of casual perusal.

10-25-2008, 04:07 PM
I've always loved the plain vanilla, ambiguous wording in most of these reports. They almost always confirm the preexisting bias of casual perusal.

I don't know, I read a fair, yet critical outlook of the prospects for the sector, rather than that of a biased one. Of course, the Johnson-Matthey article's sources go much deeper:


Analysts at RBC Capital Markets have slashed price forecasts for platinum group metal (PGM) "baskets" - comprising mainly platinum, palladium and rhodium, such that the "scenario delivers a complete collapse in sector profitability - leaving us with no exposure to any of the current major producers except Aquarius, but continuing to prefer exposure to the new producers: Platinum Australia, Sylvania, Anooraq, Platmin, Eastplats, and Ridge".

"Given", the analysts state, "the rather dramatic reduction in the average metal price basket over the past three months we are now also reducing our forecasts. The near vertical decline in the metal price basket sees the current spot metal price basket just under USD 850/oz from a high of just over USD 2,000/oz barely six months ago. The current collapse in demand (reflected in dramatic reductions in auto sales numbers), we believe, will likely see metal prices remaining below the minimum USD 1,200/oz required to sustain current production through 2009.


http://www.mineweb.co.za/mineweb/applications/mineweb/templates/images/logo_new.gif (http://www.mineweb.co.za/mineweb/view/mineweb/en/page35?oid=70892&sn=Detail)

10-25-2008, 05:12 PM
Yes, I wasn't being critical, just commenting on the structuring and linguistics of these reports. Often times the reader gleams what they wish and is stored as supportive, corroborating evidence. Analyst recommendations, for me, are usually a good fade. Mineweb's reports seem generic in that five (5) individuals could read the report and three (3) would state it appears bearish and two (2) would believe it was bullish. Asked to reread the report at least one (1) would reconsider their vote and another my split or hedge saying bearish now and maybe bullish later (I sometimes conduct these little experiments. Why?---I don't know:p ). Investor and speculative sentiment and perception is part of my fundamental strategy. The weighting of trading in the direction of fundamentals and timing entries and exits with technical analysis is mostly the same. The usage of leverage can and may vary with sentiment from other traders.

Thanks for the article.