Platinum price could spike during FIFA World Cup, says ETF Securities
25/05/10
The price of Platinum could spike during the FIFA World Cup next month, according to Shamim Mansoor, Head of Precious Metals Sales at ETF Securities Marketing LLP ("ETF Securities"). Power constraints have been a major issue for miners in South Africa as the country's state owned energy company, ESKOM, has not been able to keep up with the rapid rise in South Africa's demand for energy. On Mansoor's estimates it will be extremely difficult for ESKOM to maintain full power supply to the mining industry during the FIFA World cup scheduled for June-July this year as increased demand for power from stadiums, broadcasting centres, base camps, hotels, restaurants and other service industries takes priority.
South Africa produces approximately 75% of the annual global platinum production and the industry relies heavily on electricity, therefore any interruption or loss of electricity could have an impact on global platinum production. Eskom, which supplies 95% of South Africa's electricity has committed to ensuring uninterrupted power supply for the FIFA World Cup. Therefore, if demand exceeds supply, load shedding on miners may be enforced.
Commenting, Shamim Mansoor, Head of Precious Metal Sales at ETF Securities said:
"On the 24th of January 2008 when ESKOM instituted load shedding on the miners, ETFS Physical Platinum ETC (PHPT) went from $158.44 per security, to a high of $222.06 on 3rd March 2008, an increase of 40%. This is because electricity demand exceeded supply in South Africa and miners were forced to use only 90% of capacity, thereby reducing production. During this period inflows into PHPT rose by $166mn.
With the World Cup being held during the South African Winter, the use of electricity is likely to exceed the previous winter peak. This then begs the question whether current capacity will be able to accommodate heightened demand during the FIFA World Cup. To ensure there is an uninterrupted supply of electricity during the FIFA World Cup, load shedding is likely to be enforced again, and therefore there is a risk we will see another price spike."
Notes to Editor:
- ETF Securities' (ETFS) global holdings in platinum stand at $1.3 billion, of which $1.2 billion is physically backed.
| ETFS Product name |
Exchange |
Code |
Physically backed or Collateralised |
Performance over 12 months* |
| ETFS Physical Platinum |
London Stock Exchange
Deutsche Borse (Xetra)
NYSE Euronext
Borsa Italiana
|
PHPT
VZLA
PHPT
PHPT
|
Physically backed |
54.8% |
| ETFS Platinum |
London Stock Exchange
|
PLTM
|
Collateralised |
51.3% |
| ETFS Short Platinum
|
London Stock Exchange
Deutsche Borse (Xetra)
Borsa Italiana
|
SPLA
4RTN
SPLA
|
Collateralised |
-38.5% |
| ETFS Leveraged Platinum
|
London Stock Exchange
Deutsche Borse (Xetra)
Borsa Italiana
|
LPLA
4RUM
LPLA
|
Collateralised |
112.1% |
* Source: ETF Securities from 14-May-2009 to 14-May-2010, net of fees
- Please click on the link on the top of the email to view a graph showing the price oplatinum from 1990 to May 2010 (source: Bloomberg).
- Shamim Mansoor, Head of Precious Metal Sales at ETF Securities will be hosting the following conference call on May 26th 2010 and will be available to take press questions. Please register if you are interested.
Will the World Cup Have an Impact on Metals Prices?
Date: Wednesday 26th May 2010
Time: 11:00am and 15:00pm London Time
This call will discuss:
- Electricity Supply & Demand
- Load Shedding and the Impact on Metal Prices
- Question and Answer Session
Click here to register
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