Investec Cuts Platinum Forecast on Soft Demand Outlook

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". . .on a longer-term perspective, the fundamentals for platinum group metals demand remain very attractive."

South African investment bank and asset manager, Investec, cut its 2009 and 2010 price forecasts for platinum, palladium and rhodium, citing a downturn in demand from industrial users like automakers.

"The platinum price has rallied in the last few weeks, but a weak rhodium price and strengthening rand mean the platinum group metal basket price remains low and a number of mines are still losing money," said Investec analyst Rebecca O'Dwyer in a research note. "We see downside risk to the platinum price in the near-term, particularly if vehicle sales continue to decline in the first few months of 2009."

The bank said it now sees platinum prices at $970 an ounce in 2009 and $1,350 an ounce in 2010, down from previous forecasts of $1,350 and $1,675 an ounce, respectively. It expects palladium prices of $220 an ounce in 2009, down from a previous forecast of $318, and sees the metal at $250 in 2010, against $350 previously.

Investec also slashed its rhodium price estimate for 2009 to $1,350 an ounce from $5,625, and for 2010 to $2,250 from $6,425. However, the bank left its long-term forecasts for platinum and palladium unchanged at $1,300 and $350 an ounce, respectively. The bank noted that, while 2009 will be a difficult year for vehicle sales, ". . .on a longer-term perspective, the fundamentals for platinum group metals demand remain very attractive."

Spot platinum was quoted at $988/993 an ounce at 1131 GMT, against $990.50 late in New York on Thursday. Palladium was at $193.50/198.50 an ounce from $194.50.

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