Platinum Supply Falls to 13-Year Low as Mines Close

“Platinum supplies are falling to a 13-year low as mines in South Africa, the world’s biggest producer, close and automobile sales reach new highs.

Production will drop 2.7 percent to 5.68 million ounces, the least since 2000, according to Barclays Plc, which raised its 2013 shortage estimate sixfold last month after Johannesburg-based Anglo American Platinum Ltd. (AMS) said it plans to idle shafts. At the same time, demand from carmakers, the biggest consumer of the metal, will increase 0.5 percent in 2013, Barclays says. Investors are buying platinum at the fastest pace in three years.

Prices already rose about 10 percent this year, following the same advance for all of 2012, and will average $1,770 an ounce in the fourth quarter, the highest since 2011, according to the median of 15 analyst estimates compiled by Bloomberg. Costs for carmakers will increase because about 53 percent of all metal mined ends up in catalytic converters.

“Supplies are very tight and it’s a serious situation,” said Mihir Worah, who manages $110 billion in real return strategy funds at Pacific Investment Management Co., in Newport Beach,California. “Not only are there issues on the supply side, we could see surprises on the demand side as well.”

Platinum Price

Platinum climbed to $1,699.68 an ounce in London this year. The metal would still have to gain another 35 percent to match the March 2008 record of $2,300. The Standard & Poor’s GSCI gauge of 24 commodities added 4.8 percent since the beginning of January and the MSCI All-Country World Index of equities rose 4 percent. Treasuries gained 0.1 percent, a Bank of America Corp. index (MXWD) shows….”

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