Palladium tumbled from a 13-year high and platinum slid as producers and the main union in South Africa agreed on a wage deal that the labor organization will take to its members in a bid to end a 20-week strike.
“In-principle undertakings have been reached” with the Association of Mineworkers and Construction Union, Impala Platinum Holdings Ltd. said on behalf of miners. Talks failed this week to end a strike since January by more than 70,000 mineworkers in South Africa, the largest producer of platinum and the second-biggest for palladium.
Investor holdings in palladium- and platinum-backed funds reached a record this week amid South Africa’s longest and costliest mining strike. Demand for the metals, which are mainly used in car pollution-control devices, will exceed supply for a third successive year, Johnson Matthey Plc data show. Passenger- vehicle sales in China, the largest auto market, rose 14 percent in May, the China Association of Automobile Manufacturers said.
“Palladium is probably the metal most exposed to a bout of long liquidation considering the strong rally,” Ole Hansen, head of commodity strategy at Saxo Bank A/S in Copenhagen, said today by e-mail. “Platinum’s price behavior throughout has been much more benign and we are still not far from the price levels that was seen before the strike action began. We need to see the pen on paper before we can get to excited.”
Palladium for September delivery dropped 4.3 percent to $823.25 an ounce by 8:15 a.m. on the New York Mercantile Exchange. It touched $864.60 yesterday, the highest since February 2001. Futures trading volume was more than triple the average for the past 100 days for this time of day, data compiled by Bloomberg showed. The metal for immediate delivery fell 4.3 percent to $824.15 in London, according to Bloomberg generic pricing.
Platinum for July delivery dropped 2.4 percent to $1,445 an ounce in New York. It reached $1,488.40 yesterday, the highest since May 23. Prices rose 5.3 percent this year, compared with palladium’s 15 percent gain.
Anglo American Platinum Ltd., Impala and Lonmin Plc expect to get feedback tomorrow. South African government-led meetings ended June 9 without agreement. The AMCU is meeting members at various mines today to obtain members’ opinion on the proposal.
“There’s certainly a risk of a correction if we see any agreement,” James Moore, an analyst at FastMarkets Ltd. in London, said today by phone. “The fundamentals are still very favorable. We’re still getting supply disruption and demand continues to increase from the auto sector.”
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