Palladium prices hit their highest level since February 2001 and platinum remains strong on supply concerns; Crude oil prices extend losses as Iraq supply worries recede and exports from Libya look set to increase. Among softs, cocoa slipped from last week’s near 3-year high, while arabica coffee, sugar and cotton were also lower.
Platinum and palladium prices continue to strengthen amid ongoing supply concerns over supplies and strong demand from the automotive sector. Investor demand for palladium has also surged, with holdings in palladium-backed EFTs hitting a record early this week.
Spot palladium was fixed at $873 an ounce in the pm fix on London’s Platinum and Palladium market on July 9, its highest since February 2001. This level was revisited in the am fix the next day. Palladium September futures on the New York Mercantile Exchange (Nymex), meanwhile, settled at $872.70 an ounce on July 9, a tad below the previous day’s close at $872.90. The precious metal has gained around 6 percent since the end of South Africa’s five-month long mine strike more than two weeks ago and is 21 percent higher since starting the year at $723 an ounce spot basis.
Platinum has continued to trade near the 10-month highs reached last week, with spot platinum being fixed at $1,512 an ounce in London’s pm fix on July 10. Nymex platinum futures for October finished at $1,506.90 on July 9, up around $35 on immediate post-strike levels.
South Africa’s biggest mineworkers union, the Association of Mineworkers and Construction Union (Amcu), announced the platinum mining sector strike was “officially over” on June 24 after a wage deal was struck for more than 70,000 mineworkers.
Workers started returning to work on June 25. But since then, other smaller strikes have broken out, notably, at Impala Platinum’s Marula mine where 2,000 workers began an illegal strike on July 4.
The industrial action at Marula is understood not to be supported by the majority union, the National Union of Mineworkers, and thus is seen as ‘illegal’. Operations at Marula were not affected by the earlier industrial action.
Supply concerns for palladium are also being fuelled by lingering worries about how export flows of the metal from top producer Russia might be constrained in the event of deeper-reaching sanctions by the EU in response to Russia’s involvement in Ukraine. Russia is the top supplier of the precious metal.
Demand for platinum and palladium is also moving higher on the back of a strong rebound in car sales in the U.S. and China in particular, which have helped support a recovery in demand for both pgms for their use in auto catalysts. Auto catalysts account for around 67 per cent of palladium demand and nearly 40 percent of platinum demand.
Palladium is heading for a record global supply deficit this calendar year. In its most recent supply forecast report, London group Johnson Matthey, for instance, projected a 1.6 million ounce global deficit for palladium, while it pegged the platinum deficit at 1.2 million ounces.
Oil prices extend losses as supply concerns ease
Oil prices declined further this week as supply worries continued to ease. Brent North Sea crude, the international benchmark, came under particular pressure from the prospect of increased export flows from Libya.
Concerns about potential supply disruptions from Iraq have also continued to wane. Brent North Sea crude for delivery in August on London’s ICE Futures Europe exchange closed at $108.28 a barrel on July 9, down $2.36 on last week’s finish and its lowest point in two months.
Libya’s National Oil Corporation (NOC) last week lifted the force majeure on exports from the country’s two largest eastern oil terminals of Es Sider and Ras Lanuf after a rebel group that had been blockading the two ports for nearly a year handed them back to the government.
The two terminals have capacity to load a combined 550,000-560,000 barrels a day and the Libyan government is reported to have some 7.5 million barrels of oil stored at the two ports. Production at Libya’s largest oil field, El Sharara, also is reported to have been resumed following the lifting of the force majeure on Es Sider and Ras Lanuf.
El Sharara can typically produce 340,000 barrels a day. Countrywide, Libya was producing around 1.4 million barrels a day of oil early last summer but output dipped to a low of 150,000 barrels a day during the height of rebel group blockades and various politically-motivated strikes.
