Investors with a taste for precious metals will be watching the platinum market closely next week because if last ditch talks to end a five-month long strike by workers in South Africa’s all-important platinum mining industry are not successful the price of the metal could rise sharply.
That platinum has not reacted positively to the strike by 70,000 mine workers is one of the more interesting aspects of an event which has affected an estimated 40% of the world’s supply of platinum, a metal which plays an essential role in controlling noxious emissions from vehicle engines, as well having a market in the jewelry industry.
Normally, any commodity which has almost half of its supply effectively removed from the market, would enjoy a strong price response. That has not been the case with platinum, yet.
Worker, Management Stand-Off
There have been short-lived price spikes since the strike started over a claim by mine workers for a near tripling of entry level wages to around $1180 a month by the year 2017, and a mining company response which was a fraction of the claim.
On Friday, the platinum price rose by $24 an ounce to $1453/oz, which is about where it was when workers walked off the job.
The lack of a market response to the mothballing of mines operated by Anglo American Platinum, Lonmin and Impala Platinum is a result of the market being satisfied by stockpiled material, but as the stockpiles dwindle pressure will grow on the platinum price as it has on the South African economy.
Shrinking Economy
In the first three months of the year South Africa’s economy, as measured by gross domestic product, shrank by 0.6% with overall mining output suffering its steepest fall since 1967 with the loss of platinum exports matched by lower prices for coal, gold and iron ore.
Both sides in the platinum dispute have been hardening their positions.
For the rest of this article, click here: http://www.forbes.com/sites/timtreadgold/2014/06/07/platinum-price-posed-for-big-rise-if-south-african-strike-talks-fail-again/