FOCUS-Russian assurances not enough for PGM market
By Mike Collett-White
MOSCOW, June 24 (Reuter) - Russia said on Tuesday there would be no more delays this year in exporting platinum group metals (PGMs), but analysts said the market was more interested in seeing supplies than hearing soothing words.
Bureaucratic problems had caused a six-month hold-up that sent world palladium and platinum prices sky high and raised costs for users ranging from dental manufacturers to makers of auto catalysts in the motor industry.
Sergei Gorny, deputy director of Russia's sole platinum group metals export agent Almazjuvelirexport (Almaz), said there would be no further delays, but that Russian 1997 platinum and palladium exports would be down on last year.
Almaz had received an export licence from the Foreign Economic Relations Ministry in the past few days, allowing it to start exports, Gorny said.
``First there is a government decree which sets out the quotas, and then based on that decree the ministry hands out the licences,'' he said.
``It could be that they (1997 deliveries) are somewhat lower (than last year) because half the year has gone by already,'' Gorny told Reuters. ``I can't say how much they will be in figures, but I don't think they will be as low as half.''
The last time Almaz commented on export volumes in late May, Gorny said Russian 1997 deliveries of platinum metals would be about the same as in 1996.
Andy Smith, precious metals analyst at Union Bank of Switzerland in London said, ``These kinds of statement are comforting, but the market would clearly prefer to see physical metal rather than words.''
Gorny left enough questions open on Tuesday to allow the guessing game about Russia's exact intentions in the secretive world of precious metals to continue. He declined to give concrete export volumes, saying such information was secret.
``If I gave out that kind of information, it would truly be a scandal,'' he said. ``But this year we do have very different conditions.''
He also declined to say exactly when deliveries to Japan, the world's biggest buyer of platinum and palladium, would start, saying only that there would be no more delays or problems.
Gorny's comments suggested Russia was unlikely to flood the spot market with material, despite the huge temptation of high prices for both metals. Palladium peaked at 17-year highs earlier in June, while platinum rose to seven-year peaks.
Precious metal exports are a vital source of hard currency for Russia, which supplies 60 percent of the world's palladium and 20 percent of its platinum.
``We will not sell more than is necessary,'' he said, without elaborating on how much he thought this was. ``As concerns those deliveries beyond our contracts, we will only carry those out once we have fulfilled our contracts.''
UBS's Smith said the long-term effects of the delays, the subsequent price hike and supply tightness were likely to be negative, even for big suppliers like Russia.
``The medium and long-term reaction to this disruption is mainly negative,'' he said, adding that demand could be threatened and trade liquidity hit by players wanting to avoid getting caught on the wrong side of such a rampant market again.
Tony Warwick-Ching, precious metals analyst at CRU International in London, said the benefits the palladium market reaped in recent years by grabbing market share from platinum could be undone by the supply problems this year.
``I imagine now people will be reversing all of this,'' he said. ``People are going to be quicker to look for alternatives.''
Analysts said there was little sign of Russian metal on the markets yet. Lease rates -- the cost of borrowing metal rather than buying it outright -- would fall sharply if and when it arrived, they said, followed by a drop in outright prices.
Values are already well below their peaks. Spot palladium was last quoted at $196.00/201.00 an ounce at 1510 GMT against a June 6 high of $240. Palladium was last at $411.00/416.00 from a June 6 high of $497.
Traders said reaction to the Almaz statement was muted.
``The market is just continuing to drift, and there is a bit of selling and liquidity coming in,'' said a London dealer |
