The platinum group metals (pgm) industry is set to be badly affected by a number of major price falls which occurred yesterday (13th January), MiningMX reports.

Platinum fell by nearly $60 per oz, rhodium declined by $200 per oz and 11 per cent was slashed off the price of nickel on the London Metals Exchange.

The impact on the South African platinum industry has been profound, with Aquarius Platinum now worth around 62 per cent less than a year ago.

John Meyer, an analyst at UK stockbroker Fairfax, told MiningMX: "Aquarius in particular is carrying a lot of debt (about $250 million) and we expect it to report a deepening in losses for the fourth quarter."

Although volatility in the platinum price has been higher at various stages in the past 12 months than at present, Anglo Platinum has recently announced a 300,000 oz per year cut in production and a 30 per cent reduction in capital programme expenditure.

Impala Platinum, the world's second-largest producer of the precious metal, has remained tight-lipped about its production targets to date, but that may be because it is "not pushing as much", according to Mr Meintjes.

However, David Davis, an analyst for Credit Suisse Standard Securities, told the news provider that it is inevitable that South African producers will announce further output cuts.

"It all points to an inevitable industry restructuring as costs are not supporting production levels," he said.

"The industry has been in denial for some time."

Impala lost 12 per cent of its value yesterday, while Anglo (nine per cent), Lonmin (six per cent) and Northam (six per cent) were also dealt substantial blows.

Meanwhile, the effects are also manifesting themselves in the auto industry.

Liston Meintjes, CEO of Abercrombie Investment Managers, told the news provider: "The car industry is not building up a supply of platinum, that's for sure.

"In the next six to nine months, I expect the automakers to recover. But platinum won't burst right up again.

Mr Meintjes' comments come after a chink of light at the end of the tunnel for US automakers appeared this week, with new figures suggesting a recovery in demand.

A total of 10.3 million cars were sold during the course of December, a figure which compared favourable to industry expectations of ten million.

Source:

Aquarius hit as platinum falters (13/01/08)
http://www.miningmx.com/platinum/919429.htm