NewPlat ETF reaches record holdings on South Africa strikes

By: Anton Aleksandrov
Anton Aleksandrov
Anton is a freshly graduated economist from the States with passion for the world of finance. He is one… read more.
on Apr 8, 2014
Updated: Oct 21, 2019

iNVEZZ.com Tuesday, April 8: NewPlat ETF (JSE:NGPLT), the largest platinum-backed exchange-traded fund, topped 1 million ounces of platinum holdings for the first time last week as strikes in the South African mining sector continued for an 11th week.

The Association of Mineworkers and Construction Union (AMCU) initiated strikes in January at South Africa’s three major platinum producers – Lonmin, Impala Platinum and Anglo American Platinum. Analysts have estimated that more than 500,000 ounces of output have been lost due to the walkout, or 10 percent of annual mined platinum production. Despite the threat to the supply of the precious metal, its price has fallen by 2.2 percent since the unrest started – from $1,457 an ounce on January 23 to $1,424 yesterday. According to analysts, the large reserves of platinum have helped to calm the market during the walkouts. “Platinum’s price reaction to the strike has been limited because it was widely anticipated,” said Macquarie analyst Matthew Turner. “Inventories at mines have reduced its immediate impact, and the wide availability of other supplies has meant that consumers have not felt threatened.”

Analysts believe that in the longer term the strikes will tighten the market, potentially pushing the price up. “For platinum, it’s a positive from a price perspective that you have over half the South African platinum industry not producing, at a time when industrial demand is looking pretty good this year,” Mitsubishi analyst Jonathan Butler said.

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Platinum is primarily used in catalytic convertors that filter car exhausts and in jewellery. With sales in the European car market rising seven percent year-on-year in January and February and jewellery consumption staying robust, especially in China, demand for the precious metal is expected to be the main driver for a rise in the price. “Unless the strikes continue for much longer, we think any gains in the platinum price will be demand-led and come in the second half of the year,” commented Macquarie’s Turner. HSBC analysts are also bullish on the metal, arguing that if manufacturers have to buy platinum from the market and re-fashion it for industrial use, prices will react more strongly.

**NewPlat ETF (JSE:NGPLT)**
NGPLT is an ETF listed on the Johannesburg Stock Exchange that is entirely backed by physical platinum bullion. It currently holds 1.008 million ounces of platinum and has a market capitalisation of 15.27 billion rand (₤874 million). The ETF has returned 11.61 percent since its inception in April last year.
**As of 09.30 BST NewPlat ETF at 15,201 rand.**
**As of 09.30 BST NewPlat ETF at 15,199 rand.**

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