The five-month miner strike in South Africa has ended, but platinum exchange traded fund investors may still see low supply and elevated prices over the short-term as normal mining operations slowly get back online.
The ETFS Physical Platinum Shares (NYSEArca: PPLT) was up 0.9% Tuesday. PPLT has gained 5.9% year-to-date. [ETF Chart of the Day: Platinum Power]
Platinum spot price was hovering around $1,470 per ounce Tuesday.
South Africa, which accounts for over two-thirds of the world’s platinum supply, has ended a strike with the main platinum mining union, with workers going back to work on Wednesday, the Wall Street Journal reports.
Analysts calculate that the strike caused 1 million ounces of lost mined platinum production this year, or about a fifth of global output in 2013, Financial Times reports. Consequently, the market deficit is expected to increase to 1.2 million ounces this year, the highest in four decades.
While the strikers will return to jobs this week, the prolonged inactivity will “cast along shadow over output,” Jonathan Butler, precious metal strategist at Mitsubishi, said in the FT article.
Specifically, some miners moved back to distant families and won’t resume work right away, and many will require retraining and health checks.
“Some of the miners may not come back at all, so crews will be a bit smaller,” Butler added. “At a minimum it will be two to three months before we get near pre-strike levels of output.”