Platinum Market Update (May 24, 2012)

During its decline in April, platinum slid below $1,600 for the first time since January, ending the month with a $69 loss.

The scramble out of risk assets and into the dollar appears to be heavily pressuring the the market. Investors are showing little interest in potentially bullish news from the supply side. A strike at the Modikwa mine, which is managed by Anglo American Platinum (FWB:RPH) and African Rainbow Minerals (FWB:EB9), last month reportedly resulted in a loss of about 21,000 ounces, and Impala Platinum‘s (LSE:IPLA) Rustenburg mine is now losing about 3,000 ounces per day due to work stoppages. Work has also stopped at the Mimosa mine in Zimbabwe following a fire, though lost production is expected to be covered by stockpiled supply; the Mimosa mine is a joint venture between Impala Platinum and Aquarius Platinum (ASX:AQP).

Increasingly negative sentiment has led to reported liquidations of physical assets, selling of ETF holdings and a significant build up of short positions in NYMEX futures contracts. There is some support from buyers in the Far East, but platinum is currently sitting at about $1,421. It has continued to decline throughout the month and failed to post a close above $1,600 in May.