--Platinum for April delivery rises 0.6% to $1,462.40 a troy
ounce
--Strikes scheduled to start on Thursday at South Africa's
biggest platinum mining companies
By Matt Day
NEW YORK--Platinum climbed to the highest price in more than two
months ahead of a planned strike in South Africa that may interrupt
production in the top producer of the precious metal.
Platinum for April delivery, the most actively traded contract,
rose $8.90, or 0.6%, to settle at $1,462.40 a troy ounce on the New
York Mercantile Exchange, the highest since Nov. 6. Palladium,
produced in South Africa as a byproduct of platinum mining, also
settled at a two-month high. Palladium for March delivery edged up
0.1% to $748.85 a troy ounce.
The Association of Mineworkers and Construction Union, which
represents most of South Africa's platinum miners, plans to launch
an open-ended strike on Thursday. The union is requesting pay
increases for members to compensate for increased living costs,
which they say are rising faster than salaries.
"If this strike does continue, you could get an extreme market
reaction" should investors anticipate another supply squeeze, said
Peter Hug, director of trading with bullion dealer Kitco Metals
Inc. in Montreal. Mr. Hug said he doesn't anticipate a lengthy
strike, but platinum and palladium prices are likely to be
supported "as long as that remains a possibility."
Anglo American Platinum (AMS.JO), Impala Platinum (IMP.JO) and
Lonmin PLC (LMI.LN), targets of the planned strike and the three
largest platinum mining companies by output, in a statement this
week called the union's wage demands unrealistic.
Investors have focused on the risk of supply shortfalls since an
August 2012 strike at Lonmin's Marikana mine resulted in clashes
with police and left dozens dead. The crisis sparked rolling
strikes through South Africa's mining industry, cutting the
country's platinum output by 16% that year.
South Africa last year accounted for about 72% of global
platinum production, according to major precious metals consumer
Johnson Matthey PLC, and 37% of palladium output.
Platinum prices may rise this year even if a long South African
strike doesn't materialize, analysts with Macquarie Bank said in a
report on Wednesday. The investment bank projects platinum demand
to rise by 2.8% amid reinvigorated global auto sales, helping push
prices to $1,600 an ounce by the end of the year. Platinum and
palladium are used chiefly in catalytic converters, which scrub
emissions from automobile exhaust.
"Demand should even rise in Europe, whose car market has shrunk
in recent years," Macquarie analysts said.
--Devon Maylie contributed to this article
Write to Matt Day at matt.day@wsj.com
