Platinum futures have roared to a 16-month high, as ongoing concerns about supply cuts from top producer South Africa continued to draw new buyers to the market.
Platinum for April delivery, the most active contract, rose $US29.30, or 1.7 per cent, to settle at $US1,736.50 a troy ounce on the New York Mercantile Exchange. This was the highest settlement price since September 21, 2011, when the white metal closed at $US1,788.20 a troy ounce.
Platinum producers meeting at a mining conference in South Africa have been discussing the need to shut down the highest-cost operations in the country. South Africa supplies around 80 per cent of the world's platinum, but rising costs have made many platinum mines unprofitable, leading companies to reconsider their business options.
The world's largest platinum producer, Anglo American PLC, last month announced plans to cut its annual platinum output by 20 per cent, sparking fears of a supply shortage and drawing buyers to the market.
By contrast, palladium futures settled slightly lower as some investors chose to lock in gains on the metal's multimonth rally.
Palladium for March delivery settled down 65 US cents, or 0.1 per cent, at $US764.80 a troy ounce on the Nymex.
Palladium futures had touched a fresh 17-month intraday high of $US772.90 a troy ounce, the highest traded price since September 2, 2011. But prices struggled to hold those levels as some traders opted to sell their holdings and lock in profits on palladium's recent rally. Palladium futures are up 8.7 per cent so far this year.
Moreover, Standard Bank analysts warned that recently published Swiss customs data has painted an overly bullish picture of the palladium market.
Zurich has long been the destination for Russian government's sales of stockpiled palladium, and investors tend to look at the trade flows as a proxy for Russian supply. Moscow's reservoir of palladium is a state secret, but traders have long worried that the flow of metal could soon dry up and lead to shortages.
These worries escalated after Swiss data showed a 72 per cent drop in Moscow's palladium shipments to Zurich in 2012.
But the data give "only a partial picture" of the palladium market, said Standard Bank. Palladium contracts have been settled based on London delivery since September 2009, "as a result more metal has flowed into London vaults at the expense of Zurich," they said.