PGMs Prices Adversely Affected By South African Labor Dispute

Johannesburg-South Africa (Apr 22)  Progress toward a potential labor agreement in South Africa has taken a toll on platinum group metals lately, but nevertheless prices are likely to rise this year with both platinum and palladium in supply deficits, says TD Securities. While there is still much uncertainty in a three-month old strike against three major South African PGM producers, there has been progress toward an agreement with management offering the union’s demand for an eventual basic salary of 12,500 rand per month, TDS points out. ”As such, it should not be too long before production resumes,” the firm says. Also, hopes for peace on the Russia-Ukraine front imply more production from key producer Russia. “However, both metals are to post large deficits this year and mine site inventories are down significantly,” TDS says. “Producers used above-ground stocks and may have purchased metal to fill orders. In addition, we are seeing a large increase in global auto-catalyst demand and a sharp increase investor interest.” TDS says it expects palladium prices to average $850 an ounce in the fourth quarter and platinum $1,675.