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Palladium prices rise to three-year high on SA strike concerns

Nicholas Larkin

The metal's futures for June delivery have risen to $823 an ounce, the highest since August 2011 as a result of concerns about a supply shortage.

It may be cold comfort, but fear of commodity shortages is finally filtering down to the market. (Reuters)

Palladium rose to its highest level since August 2011 on concerns that supplies will be disrupted in South Africa, the world’s second-largest producer. Platinum also rose.

Members of the Association of Mineworkers and Construction Union (Amcu), the biggest labour union at mining giants Anglo American Platinum, Impala Platinum and Lonmin, have been on strike in South Africa since January 23. Workers were prevented from reporting for duty at Lonmin on Wednesday as the producer reopened mines, according to a union not participating in the strike.

Palladium prices are up by 15% this year as a result of concerns that the strike in South Africa may add to a supply shortage. The United States and Europe threatening economic sanctions against Russia, the top producer globally, have also pushed prices up by spurring speculation about disruptions to exports.

“Workers have been prevented by force from returning to the mines,” said a Commerzbank analyst. “This will doubtless make it impossible for production to be resumed and for the time being will continue to drive up platinum and palladium prices.”

Palladium futures for June delivery rose by 0.7% on the day to $823 an ounce in mid-morning trade on the New York Mercantile Exchange, after touching $825.85, the highest price since August 3 2011.

Platinum futures for July delivery were up by 1.5% compared with a day earlier to $1 477.50 an ounce in New York, after touching $1 478.60, the highest since March 17. South Africa is the top producer.

Police in armoured vehicles are present in living areas around Lonmin’s mines in North West, escorting employees who wish to return to work, said Sydwell Dokolwana, a regional secretary for the National Union of Mineworkers. 

No violent attacks near mines belonging to the producers were reported on Tuesday night or Wednesday morning, according to Thulani Ngubane, the provincial spokesperson for the South African Police Service. He said four people were killed and another six assaulted during various attacks last weekend and on May 12.

Holdings in exchange-traded products backed by platinum and palladium rose to records this week, according to Bloomberg data. – Bloomberg

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