Analysts at HSBC have lowered their 2013 average platinum price forecast to $1,710 an ounce, a drop of 7.6% from a previous estimate of around $1,840. Earlier this year, demand for platinum from automakers and jewelers was forecast to outstrip supply, which has languished due to mine closures and labor unrest, especially in South Africa, the world’s largest producer of platinum.
Platinum markets have been reacting to the fall in the price of gold, and even an expected shortfall of more than 800,000 ounces is not expected to push the price sharply higher.
Demand from automakers is higher as they build more cars this year, but demand from jewelers, especially in China, is not showing many signs of growth. Demand for platinum from exchange traded funds (ETFs) backed by physical platinum is also higher this year.
Combined with the mine closures and labor troubles, the lower supply should be driving up the price. But the weakness in gold prices is keeping the lid on for the moment because no one wants to bet that platinum will run away from gold. That appears to be a wise decision.
The ETFS Physical Platinum Shares (NYSEMKT: PPLT) fund closed at $142.55 last night, in a 52-week range of $135.80 to $170.78. Shares are down about 7.3% since the beginning of the year.
The UBS E-TRACS Long Platinum Total Return ETN (NYSEMKT: PTM) closed at $16.45 last night, in a 52-week range of $15.61 to $21.00. Shares are down more than 8% year-to-date.
The iPath DJ-UBS Platinum Total Return Sub-index ETN (NYSEMKT: PGM) closed at $32.39 last night, in a 52-week range of $30.55 to $39.33. Shares are down nearly 8.5% year-to-date.