By Leia Michele Toovey – Exclusive to Platinum Investing News

Platinum rebounded this week to $1,771 per ounce

The platinum market has rebounded this week, but not enough to stop JP Morgan analysts from releasing their opinion on the metals poor short term outlook. Platinum’s recent rally was brought about by gold’s price jump extending optimism to the entire precious metals sector. Platinum’s rebound comes just a week after it touched a four month low. Platinum for June delivery jumped 0.4 percent to $1,741 per ounce today. The most-active contract fell on July 24 to the lowest level since March 25. Metal for immediate delivery was at $1,771 per ounce.

This upward trend was not enough to get the bad taste out of some analyst’s mouths.  JP Morgan Chase released a statement today, indicating that they have altered their short term views on platinum prices. As a result of platinum’s two week, 13 percent price decline, JP Morgan cut their 2008 price target to $1,885 per ounce, from $2,156 per ounce.  For 2009, they adjusted down to $1,650 per ounce, from $1,981 per ounce.  Johannesburg based analysts Steve Shepherd and Allan Cooke added to the statement “Notwithstanding a wide range of uncertainties, we are not altering our positive longer-term views.” 

Market optimism or not, Anglo Platinum is still off to the races. The world’s biggest platinum producer announced their intentions to push forward with their Unki project in Zimbabwe, despite the political instability in the region.  The company’s current strategy for Unki, located near Gweru on Zimbabwe’s Great Dyke, is to start producing platinum in two years, but Anglo Plat concedes that its plans for the project will be influenced by events in and around Zimbabwe.  The project is planned to produce at least 150,000 ounces per annum.

This project is important to the company’s long-term growth strategy, as it is known to hold the most important geological platinum formation outside South Africa. Anglo Platinum is continuing with the development of Unki as planned, and will react to developments in Zimbabwe as they occur.  Anglo Platinum is still implementing substantial expansions in South Africa, but for long term growth it is important to grow production in Zimbabwe. Anglo plat hopes that their next big platinum mine will be in Zimbabwe.

Currently, Anglo Plat is looking to step up its second half output, after a lack luster first half.  Situations largely beyond Anglo Plat’s control, namely flooding and power shortages in South Africa put a damper on output.  However, bad production news lent support to the companies stock.   Output fell 16 percent to 1 million ounces of refined platinum in the six months ended June 30 compared with the same period a year earlier. Anglo Plat is still sticking to its guns of an annual production target of 2.4 million ounces compared with 2.47 million ounces in 2007. Full production has been restored at Amandelbult mine, where 67,000 ounces were lost when it was partially flooded in January. An electricity shortage, which closed most mines in South Africa for five days in January, has also been stabilized by national power utility Eskom Holdings Ltd.

Platinum prices increased on concern of a shortage and offset the decline in output to boost Anglo Platinum’s net income by 22 percent to $1.11 billion, from the same period a year earlier. Anglo Plat’s operating costs rose 46 percent, more than four times South Africa’s 10.9 percent inflation rate.  The company expects operating cost increases to stabilize in the second half.

Anglo Plat’s developing plans in Zimbabwe are as a means to compensate for their prediction that South African platinum supplies will decline in the near future.  Anglo Plat believes that this drop in supply will lend support to platinum prices.  They are not alone in this opinion. In response to JP Morgan’s recent release, many analysts are contributing their outlooks. Stephen Roelofse, a fund manager at Metropolitan Asset Management, released the statement “I can’t share the sentiment that the platinum price will weaken a lot. I think it has reached its low point and will strengthen from here. The negative sentiment in relation to stocks has also been overdone.”

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