Latest news with #PolinaDevitt
Yahoo
a day ago
- Business
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Analysis-Platinum prices have limited upside after June's stellar rally
By Polina Devitt and Anushree Mukherjee LONDON (Reuters) -Platinum prices have limited room to rise further after a record quarterly rally, analysts and traders said, with Chinese imports expected to soften and South African output to recover against a backdrop of still-muted auto sector demand. Prices of the metal surged 36% in the second quarter as a rise in Chinese imports and a drop in supply from major producer South Africa followed earlier heavy flows into NYMEX exchange stocks on fears platinum would be hit by U.S. import tariffs. In June alone, prices jumped 28% as hedge funds and speculative traders piled in, notching their strongest month since 1986 and hitting an 11-year high of $1,432.6 an ounce. "Platinum has broken out of a decade-long range, and, in doing so, has put itself on the radar of professional and retail investors alike who now think 'Hey, this is really undervalued fundamentally'," said Tai Wong, an independent metals trader. "But there has been a lot of volatility at the highs, and the market will want to see bigger demand from China and/or exchange-traded funds for a sustained move higher," he added. After strong deliveries of platinum to NYMEX stockpiles between December and March on fears the metal would be hit by April's reciprocal U.S. tariffs, tight near-term availability led lease rates to spike, forcing industrial users to buy instead of borrow. While platinum group metals were eventually excluded from the April tariffs, another probe ordered by Trump in mid-April into potential new tariffs on all U.S. critical minerals imports meant uncertainty continued. Meanwhile, data from the world's largest PGMs producer South Africa showed mined output of the metals fell 24% in April, capping what Morgan Stanley referred to as "exceptionally weak" production data for the first four months of 2025. China's platinum imports were also strong in the quarter, at 10 metric tons in April and 10.5 tons in May. That followed research from industry group WPIC showing Chinese platinum jewellery fabrication rose 26% in the first quarter. Put together, those factors made up "an explosive mixture for higher prices", one trader said. BULLS RUNNING OUT OF PUFF But explosions tend to be short-lived, and analysts question whether there is enough underlying support to sustain a stronger rally. Metals Focus sees the global platinum market in a deficit of 529,000 ounces this year, but the resulting reduction in above-ground stocks will still leave them at 9.2 million ounces, equal to 14 months of demand - a fairly comfortable buffer. While uncertainty over U.S. trade policy on platinum lingers, raising import tariffs for the metal would ultimately be counterintuitive, says Wilma Swarts, director of PGMs at Metals Focus, as North American supply falls short of the region's demand. Platinum lease rates, which touched 22.7% in June, have since fallen back to 11.6%. Mine supply in South Africa meanwhile is expected to show signs of recovery in the second half, with overall global mined output seen down just 6% in the year as a whole. "There were definitely some challenges with the rains, power and water disruptions in southern Africa between January and March, but nothing major or out of ordinary," said Johan Theron, spokesperson for Impala Platinum. And strength in physical demand for platinum in China only lasted until prices topped $1,050 in early June, according to one trader. China's June import data, due on July 20, is expected to show a decline after very strong platinum deliveries in the previous two months. That leaves the platinum market vulnerable to one of the last decade's most bearish factors - waning demand from the auto sector, which uses the metal as a component in catalytic converters for combustion-engine cars. CAR TROUBLE Long-term pressure on the platinum group metals from the expansion of electric vehicles persists, while global trade disputes have further dampened the auto sector's mid-term outlook. Auto production forecasters have removed as much as 10 million units from production projections over the next four years, and lower vehicle production will lead to weaker PGMs demand, Metals Focus said. The consultancy is forecasting auto sector platinum demand to decline by 2% this year after a 3% fall last year. Nornickel, the world's largest palladium producer, says any further rise in platinum prices could lead catalyst producers towards more substitution of the metal for palladium. Price spreads between the two metals of more than 30% would encourage that, it said. Platinum was 22% more expensive than palladium on Thursday. But while analysts and traders are cautious about further gains in platinum prices, they are not expecting them to correct. StoneX analyst Rhona O'Connell said some of China's high April-May platinum imports could be in part a bargain-hunting exercise. "China is renowned for buying material that is out of favour," she said. "And although the electrification of the vehicle fleet is advancing apace, the internal combustion engines and the diesel sector are still in place." Analysts see prices stabilising at levels above those seen before the rally, supporting miners' margins as the market heads for a third year of structural deficit.
Yahoo
a day ago
- Business
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Analysis-Platinum prices have limited upside after June's stellar rally
By Polina Devitt and Anushree Mukherjee LONDON (Reuters) -Platinum prices have limited room to rise further after a record quarterly rally, analysts and traders said, with Chinese imports expected to soften and South African output to recover against a backdrop of still-muted auto sector demand. Prices of the metal surged 36% in the second quarter as a rise in Chinese imports and a drop in supply from major producer South Africa followed earlier heavy flows into NYMEX exchange stocks on fears platinum would be hit by U.S. import tariffs. In June alone, prices jumped 28% as hedge funds and speculative traders piled in, notching their strongest month since 1986 and hitting an 11-year high of $1,432.6 an ounce. "Platinum has broken out of a decade-long range, and, in doing so, has put itself on the radar of professional and retail investors alike who now think 'Hey, this is really undervalued fundamentally'," said Tai Wong, an independent metals trader. "But there has been a lot of volatility at the highs, and the market will want to see bigger demand from China and/or exchange-traded funds for a sustained move higher," he added. After strong deliveries of platinum to NYMEX stockpiles between December and March on fears the metal would be hit by April's reciprocal U.S. tariffs, tight near-term availability led lease rates to spike, forcing industrial users to buy instead of borrow. While platinum group metals were eventually excluded from the April tariffs, another probe ordered by Trump in mid-April into potential new tariffs on all U.S. critical minerals imports meant uncertainty continued. Meanwhile, data from the world's largest PGMs producer South Africa showed mined output of the metals fell 24% in April, capping what Morgan Stanley referred to as "exceptionally weak" production data for the first four months of 2025. China's platinum imports were also strong in the quarter, at 10 metric tons in April and 10.5 tons in May. That followed research from industry group WPIC showing Chinese platinum jewellery fabrication rose 26% in the first quarter. Put together, those factors made up "an explosive mixture for higher prices", one trader said. BULLS RUNNING OUT OF PUFF But explosions tend to be short-lived, and analysts question whether there is enough underlying support to sustain a stronger rally. Metals Focus sees the global platinum market in a deficit of 529,000 ounces this year, but the resulting reduction in above-ground stocks will still leave them at 9.2 million ounces, equal to 14 months of demand - a fairly comfortable buffer. While uncertainty over U.S. trade policy on platinum lingers, raising import tariffs for the metal would ultimately be counterintuitive, says Wilma Swarts, director of PGMs at Metals Focus, as North American supply falls short of the region's demand. Platinum lease rates, which touched 22.7% in June, have since fallen back to 11.6%. Mine supply in South Africa meanwhile is expected to show signs of recovery in the second half, with overall global mined output seen down just 6% in the year as a whole. "There were definitely some challenges with the rains, power and water disruptions in southern Africa between January and March, but nothing major or out of ordinary," said Johan Theron, spokesperson for Impala Platinum. And strength in physical demand for platinum in China only lasted until prices topped $1,050 in early June, according to one trader. China's June import data, due on July 20, is expected to show a decline after very strong platinum deliveries in the previous two months. That leaves the platinum market vulnerable to one of the last decade's most bearish factors - waning demand from the auto sector, which uses the metal as a component in catalytic converters for combustion-engine cars. CAR TROUBLE Long-term pressure on the platinum group metals from the expansion of electric vehicles persists, while global trade disputes have further dampened the auto sector's mid-term outlook. Auto production forecasters have removed as much as 10 million units from production projections over the next four years, and lower vehicle production will lead to weaker PGMs demand, Metals Focus said. The consultancy is forecasting auto sector platinum demand to decline by 2% this year after a 3% fall last year. Nornickel, the world's largest palladium producer, says any further rise in platinum prices could lead catalyst producers towards more substitution of the metal for palladium. Price spreads between the two metals of more than 30% would encourage that, it said. Platinum was 22% more expensive than palladium on Thursday. But while analysts and traders are cautious about further gains in platinum prices, they are not expecting them to correct. StoneX analyst Rhona O'Connell said some of China's high April-May platinum imports could be in part a bargain-hunting exercise. "China is renowned for buying material that is out of favour," she said. "And although the electrification of the vehicle fleet is advancing apace, the internal combustion engines and the diesel sector are still in place." Analysts see prices stabilising at levels above those seen before the rally, supporting miners' margins as the market heads for a third year of structural deficit.
Yahoo
02-06-2025
- Business
- Yahoo
Aluminium premium for US buyers soars after Trump doubles tariffs
By Polina Devitt LONDON (Reuters) -Premiums for consumers buying aluminium on the physical market in the United States soared on Monday after U.S. President Donald Trump said he planned to increase tariffs on imported steel and aluminium to 50% from 25%. The U.S. is heavily reliant on aluminium imports. About half of all aluminium used in the country for transport, packaging and construction is delivered from elsewhere, with the vast majority coming from Canada. The new tariffs are due to take effect on June 4. Buyers on the physical market usually pay the London Metal Exchange (LME) benchmark aluminium price plus a premium covering taxes, transport and handling costs. The U.S. Midwest duty-paid aluminium premium reached $0.58 per lb, or $1,279 a metric ton, on Monday. That was a 54% jump from Friday and 164% growth since the start of 2025. Part of Monday's growth was amplified by June 2 being the first trading day of the new month, when regional premiums often make a strong move. Goldman Sachs said the premium would need to rise to between $0.68 and $0.70 per lb to fully reflect the 50% import tariff. LME benchmark aluminium was last up 0.4% at $2,453.5 a ton. The higher premium could weigh on U.S. spot market purchases if consumers wait to see if there is a reversal or any exemptions, Morgan Stanley said in a note. Aluminium production depends heavily on the competitively priced and secure power supply source. It has been forty-five years since anyone built a primary aluminium smelter in the U.S. Emirates Global Aluminium said in May it would invest $4 billion in construction of an aluminium plant in the U.S. with first metal expected by the end of the decade. The plant would have an annual production capacity of 600,000 metric tons. For comparison, the U.S. imported 2.7 million tons of unwrought aluminium from Canada last year, according to the Trade Data Monitor. Steel and aluminium tariffs were among the earliest put into effect by Trump when he returned to office in January. The tariffs of 25% on most steel and aluminium imported to the U.S. went into effect in March. The 25% tariff prompted some producers to divert aluminium to Europe, leading to a 45%-fall in the European aluminium premium since the start of 2025 and inflating an outflow of aluminium scrap from the EU to the U.S.
Yahoo
08-04-2025
- Business
- Yahoo
Analysis-Gold's current rally: echoes of the 1980s with a more sustainable core
By Polina Devitt and Veronica Brown LONDON (Reuters) - Gold's latest gallop to all-time highs has drawn comparisons with the last time political and economic turmoil were the main drivers of record prices, back in 1980. But market players say the nature of this rally - and potentially its ability to endure - look different. With tensions running high between historic allies over U.S. tariffs, global trade, and wars in Ukraine and the Middle East, big powers look unlikely to pull together swiftly this time to resolve the issues driving interest in bullion as a haven from risk, analysts say. The metal's surge above $3,000 an ounce, driven most recently by U.S. President Donald Trump's new round of tariffs on trading partners, has been the first time in a long time that geopolitics and economic uncertainty have served as the top factors moving the gold market, HSBC analyst James Steel said. Spot gold hit a record $3,167.57 per troy ounce last week and is up 16% so far this year, on top of 27% growth in 2024. While the market's trajectory won't be linear, analysts say gold's entry into uncharted territory looks more sustainable than the one seen 45 years ago. As the precious metal has an inverse correlation with trade flows, analysts said Trump's stance on tariffs - including Wednesday's announcement of Washington's steepest trade barriers in more than 100 years - has driven new investors into gold, fuelled by fear of an all-out trade war. The dollar is also typically known to be a safe-haven asset, but there are some signs of the erosion of its status as uncertainty over tariffs intensifies. More broadly, since taking office 2-1/2 months ago, Trump has upended the world order, signalling the U.S. may no longer guarantee Europe's security as Washington has since World War Two, and radically shifting the U.S. approach to war in Ukraine. He also mooted a possible U.S. annexation of Greenland. The issues driving gold 45 years ago - most notably the Iranian Revolution and the oil crisis - were remedied relatively quickly, leading gold to decline, HSBC's Steel said. "But the breakdown in international cooperation in the last few years has led to gold staying permanently high," he said. "It leads one to think… there is a bigger geopolitical bid in the market." BREAKDOWN OF COOPERATION The trade tensions are only the latest in a string of factors driving gold higher. The 2020s have seen a two-year coronavirus pandemic followed swiftly by Russia's 2022 war with Ukraine, the Chinese property market crisis, and Israel's war in Gaza. The Ukraine war involved the precedent of Western sanctions freezing half of Russia's foreign currency reserves, with Moscow managing to keep effectively only gold. That attracted non-Western central banks towards bullion as they sought to diversify their reserves away from the dollar. Monetary easing and worries about budget deficits also drove further Western investment in bullion last year. Handling any of those issues may take global cooperation of a kind not yet seen in addressing the current turmoil surrounding tariffs. "Unlike other recent crises that triggered coordinated global responses, this time there's no real prospect of policy alignment," said George Griffiths, head of dealing at brokerage AMT Futures, referring to escalating trade tensions. While the market has this year conquered a series of milestones, one more remains. StoneX analyst Rhona O'Connell noted that gold peaked at $850 in January of 1980, which in dollar terms would equate to $3,486 today. "While we have most definitely hit new highs in nominal terms, you could argue that we might not have hit it in real terms," HSBC's Steel said, referring to the 1980s milestone. That could change. The current backdrop has widened expectations of an extended run higher where 2026, instead of this year, is being seen as the peak of gold's rally. On March 26, BofA commodity strategist Michael Widmer raised his gold price forecast to $3,063 and $3,350 in 2025 and 2026 respectively, from $2,750 and $2,625 prior, and reiterated it on Sunday. He now sees spot gold prices hitting $3,500 within two years. "Calling for $3,000 was easier than calling for $3,500 for gold. But what's the other risk here?" said Widmer. "The risk is that you go back to where you were two years ago... where you have a more collaborative environment globally, no risk of trade wars, U.S. Federal Reserve raising rates, economies stabilising and the sentiment stabilising. In that case, the gold trade would be effectively over." "But I think it's unlikely." Sign in to access your portfolio
Yahoo
01-04-2025
- Business
- Yahoo
Gold stocks in Comex warehouses on track to hit new records over coming days
By Polina Devitt LONDON (Reuters) - Gold stocks in Comex warehouses are on track to hit new records over the coming days due to the risk of import tariffs curtailing shipments to the United States from other countries, analysts and traders say. Latest data from Comex, part of CME Group, shows gold stored in its warehouses in the United States at an all-time high of 43.3 million troy ounces worth $135 billion at current prices compared with 17.1 million in November when Donald Trump was elected U.S. President. Spot gold prices surged past $3,100 per ounce to a fresh record high on Monday. Bullion is up 19% so far this year after rising 27% in 2024. [GOL/] Flows may have slowed recently, but sources say gold is still being flown to the U.S. as Trump has promised to unveil a massive tariff plan on Wednesday, which he has dubbed "Liberation Day." "There is still material going to the U.S. almost daily," said a source from a Swiss refinery. Switzerland is the world's biggest bullion refining and transit hub. Between December and March, 25.4 million ounces of gold worth $79 billion were delivered to Comex as the risk of U.S. import tariffs widened the premium between Comex futures and London spot prices. As gold travels quickly by airplanes, these flows are the most striking example of the pricing and physical dislocation caused in the market by the uncertainty. Comex gold stocks are now equal to five years of U.S. total gold consumption, estimated by BNP Paribas at 8.8 million ounces a year. "I would be surprised if anyone started exporting gold out of the U.S. any time soon," Adrian Ash, head of research at London-based BullionVault. If gold is excluded from U.S. import tariffs, the market could see a reversal, perhaps muted, of the trend. "If that is confirmed, I see no reason why some of those bars should not head back to London, which remains the main trading hub for physical gold," said Ole Hansen, head of commodity strategy at Saxo Bank. In London, the world's largest over-the-counter gold trading hub, the shock of massive supplies to New York has been absorbed and the liquidity improved as the market borrowed from central banks, storing their bullion at the Bank of England's (BoE) vaults. The waiting time to load gold out of the BoE vaults has narrowed to 2-3 weeks from 4-6 weeks in January, according to three sources familiar with the matter, who requested anonymity to reveal operations. BoE declined to comment. The London Bullion Market Association reported 8,477 metric tons as of the end of February - that is still six times more gold stored in the London vaults than there is in Comex gold stocks. The price discovery process remains in London, according to analysts.
