Tight Supply to Support Platinum Prices

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"Rising fabrication needs, strong investment demand will keep platinum supplies tight."

Rising fabrication needs and continued strong investment demand in 2010 will keep platinum supplies tight and should boost prices, the metals consultancy CPM Group said Tuesday.

CPM said in its annual Platinum Metals Group said the profit-taking is already being seen in platinum ETFs. Platinum holdings in ETF Securities' London Stock Exchange (LSE) listed ETF has declined by 46,750 ounces between the end of 2009 and April 15, CPM said. The LSE ETF was the first to be launched for platinum. "In this manner, net additions of newly refined platinum supplies to platinum investor holdings are likely to decline, even as investor demand remains strong," the report said.

Investors are expected to remain attractive to platinum because of the potential for price appreciation based on the metal's positive supply and demand fundamentals. CPM said total newly refined platinum supplies in 2009 were 7,043,000 million ounces, minus 2.9% less than in 2008. Platinum supply declined during 2009 because of reduced secondary recovery of the metal, CPM said.

"This year total supply is projected to rise 5.5% to 7,468,461 ounces," the report said.

Projected higher prices should also boost mine production, which was flat during 2009, CPM said. "Higher prices should result in many of the mines that were shuttered during the recession of 2008-2009 being restarted, said CPM.

"Mine production may rise 5.6% on a world-wide basis this year, to 6,658,461 ounces," CPM said.

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