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Barclays estimates supply disruptions would need to last another 4-6 weeks to balance the market assuming demand conditions do not deteriorate further.

29 Sep 2012

LONDON(Commodity Online): Despite the slew of production losses, Barclays is forecasting the platinum market to remain in surplus for the remainder of 2012.

They estimate supply disruptions would need to last another 4-6 weeks to balance the market assuming demand conditions do not deteriorate further.

"In addition to this, political uncertainty continues to plague PGM output in Zimbabwe with the government ordering Zimplats to pay levies spanning the past five years after the revised tax assessment." the Bank said in a report.

After the policy announcement by the Fed and the ECB, gold and silver prices have continued to be swayed by investor sentiment and the macro environment, but the PGMs had started to drift lower as labour issues seemed to be settling in South Africa and market focus shifted back to demand in Europe and concerns over China. However, the labour issues in South Africa are not likely to subside quickly and clearly, in our view.

The reoccurrence of unrest at Impala’s operations after a wage settlement was reached earlier in the year and the turbulence spreading outside of the PGM sector has highlighted the depth of the problems have increased a notch.

Impala Platinum, the second-largest platinum producer, reported this week it would give its workers a “pay adjustment” after workers had demanded a second pay increase equal to the rise granted in April.

However, Anglo American Platinum has said it has lost 20koz of platinum since the start of the strike action on 12 September and less than 20% of the workforce was present at its Rustenburg operations. The company has now given its workers until Thursday to return to work before it intends to commence disciplinary action.

Gold prices

Gold prices in INR terms have eased from recent record highs as the rupee strengthened modestly against the USD but remain elevated and local dealers have reported significantly lower flows y/y. Meanwhile, central bank buying, which helped in part to compensate for the softer physical market in H1 12, remained on the demand side in August but appetite was much softer compared to recent months as prices gained momentum.

The central bank of Russia added less than a tonne compared to just under 20 tonnes in July while Turkey’s revision refers to a new reserve management policy. Investor sentiment remains key here, and it is worth highlighting gold ETP activity saw signs of profit-taking this week with net redemptions of 10 tonnes but overall interest remains elevated.

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