Pacific North West Capital Corporation-PFN on Alberta Message Board

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Gold/Mining/Energy : Pacific North West Capital Corporation-PFN on Alberta

PFN 7.515

+0.1%

Nov 6 4:00 PM EST

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To: Brumell who wrote (1972)	8/24/2000 8:30:32 PM
From: VAUGHN	Read Replies (1) of 2255

Hello Brumell This from a friend: Posted: 2000/08/23 01:24 PM EDT Illiquid platinum market expected to intensify Impala Platinum, the world's second largest platinum group metal (pgm) producer, believes the spate of platinum and palladium destocking from Switzerland is slowing. This development may exacerbate the current lack of liquidity in the market which has seen platinum spike in the last six months. Impala's average price received for platinum was 18 per cent higher year-on-year at $424 per ounce ($479/oz in the second half). Marketing director Derek Engelbrecht believes about 1.5 million ounces of platinum has been exported over the last two years from Swiss sources – the destination for much of Russia's output. Swiss sales slowed to 120 000 ounces in the six months to June compared to 1-million ounces for 1999. There has been a similar decline in destocking in palladium falling to 266 000 from 500 000 ounces over the same period. This has had a discernible effect on lease rates for platinum. The fomer can be borrowed by between 11 to 12 per cent against a historical level of five per cent. (This is small beer compared to the 75 per cent lease rate for platinum earlier this year). Lease rates for palladium are more reasonable, partly owing to automotive manufacturers who are thought to be leasing material back into the market, thus reducing their own carrying costs. However, the pressure on the platinum market is testing the elasticity of China's burgeoning platinum jewellery market. But even though platinum jewellery manufacturer's margins are being crushed in China, there is no apparent resistance from consumers. Chinese jewellery manufacture chews about 950 000 ounces of platinum a year and has become more important than the traditionally key Japanese market. In fact, platinum jewellery sales in Japan continue to disappoint falling to about 20 per cent of the total market from 30 per cent. It is perhaps owing to reliance on the Chinese market that is spurring Impala to consider making in-roads elsewhere. The company plans to create a larger platinum jewellery market in India. "We believe from our research that the Indian market is looking for something different and that it is getting bored with yellow gold," says Engelbrecht. "But we hope the Russians come back into the market with their annual dump," Engelbrecht says, commenting on a possible increase of platinum sales in September. Russian platinum and palladium exports are expected to re-enter the market as contracts with Japanese buyers are re-launched. But the degree of exports is not expected to be excessive. Russian temperance is based on the fact that miner Noril'sk is making good money from its primary copper, nickel and palladium production. In addition, there is expected to be a lack of pressure from the central government level which normally asks Noril'sk to bolster the country's foreign exchange earnings. This is owing to the oil price boom which is earning Russia between $400 million to $500 million a week in revenues. Engelbrecht believes a $50 decline in the platinum price would be the perfect outcome of improved liquidity. But even if more material hits the market the Chinese are expected to mop up: "There is a pool of buying just waiting to happen," says Engelbrecht. By: David McKay Regards

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