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European auto demand has remained soft, with the data reported to November continuing to extend the y/y sales downtrend for 13 straight months; preliminary estimates for December paint a similar picture.

17 Jan 2013

LONDON(Commodity Online): Inventory levels on the supply side in platinum are set to start the year on a leaner note according to reported data, Barclays said.

With the cuts, a more modest improvement on the demand side is required to support a sustained increase in prices.

European auto demand has remained soft, with the data reported to November continuing to extend the y/y sales downtrend for 13 straight months; preliminary estimates for December paint a similar picture.

Short-term positioning in Nymex platinum has eased over the past month, while ETP flows finished the year on a positive note, but the pace of fresh buying has slowed.

However, including closed funds, such as Sprott (up 81.5koz since launching in December), flows are at their highest since August.

Platinum prices have had a strong start to the year, rallying more than $150, towards $1700, and testing levels last reached in October. Indeed, the platinum-gold ratio has risen to 1.004, with platinum regaining its premium to gold, last seen in March 2012.

The move in the spread this time has been driven by platinum.

Market focus has shifted to supply and the operational review at Anglo American Platinum. The company has proposed closures of Khuseleka (136koz), Khomanani (109koz) and Union North (74koz) with Union North and South marked for disposal.

Assuming Union ownership is transferred and operations are wound down over the next couple of months, this takes our balance from a modest deficit (38koz) to 256koz.

Closure of higher-cost mines, prices trading close to $1700 and the current ZAR/USD rate means less than 10% of production is cash-negative.


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