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Speculators Push Up Platinum Prices

May 25, 2000|Bloomberg News

Have the stock market's former "momentum" players moved to the commodities markets?

Platinum soared Wednesday to its highest level in more than three months as speculators bought the metal, encouraged by prospects of rising demand amid tight supply.

Near-term futures in New York jumped $7.30 to $548.80 an ounce after trading as high as $555. The price has risen 11% during the last two weeks.

Traders "like a good story and platinum clearly is one," said Trevor Pitts, a manager of platinum and palladium trading at Standard Bank in London. "Demand prospects are great, and there's physical shortage of the metal. There was the largest deficit in years" in 1999, he said.

Tighter car emission laws worldwide boost demand for platinum, used by car makers to build emission-control devices. The car industry accounted for 29% of global platinum demand last year, according to British refiner Johnson Matthey.

The world's 1999 platinum supply, at 4.87 million ounces, fell 730,000 ounces short of demand, Johnson Matthey said. The only other deficit year in the last five years was 1997, when supply lagged by 170,000 ounces behind demand.

Supplies remain tight. Russia, the world's second-biggest platinum producer after South Africa, has yet to begin exports from its stockpiles, the country's biggest producer of the metal, RAO Norilsk Nickel, said Tuesday.

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