Strike Deter Platinum Miners’ Production; Platinum Up in 2014

by on January 20, 2014 7:13 am GMT

South Africa represents 73 percent of worldwide platinum production, and labor strikes are common-ground among the largest miners. Lonmin PLC and Impala Platinum Holdings Ltd. are expected to receive strike notices, once again, over wages since the South African union called a labor stoppage.

If demands on pay are not met, the Association of Mineworkers and Construction Union (AMCU) President Joseph Mathujwa will be issuing Lonmin strike notices today and impose a strike nothings done by the 23. Workers at Anglo American Platinum Ltd., the second-largest production, are meeting to determine whether a strike is an option.

The AMCU is demanding a wage increase that doubles what is currently the normal at 12,500 rand, or $1,144 per month. The union is also proposing strikes at South African gold producers of wages, as well. ““It’s within AMCU’s right to call a strike, but we hope they first give us opportunity to negotiate further,” said Johan Theron, a spokesmen at Impala.

Platinum is up big in early-2014. Currently trading at $1,462.7 per ounce, platinum is up roughly $93 per ounce 20 days into the new year. Platinum is likely to trend higher with the nearest resistance at $1,475 per ounce. Price action was able to close above the 200 EMA with both momentum and a close at the top of the range.

The trend strength looks to be growing, but the RSI is indicating an over-extension in price activity. Platinum will see a short-term pullback, but, from $1,475, a push to $1,482.5 is probably.

Near-term support will be found at $1,455 with additional support at the 200 EMA. The end of the year see a parabolic jump in futures contract open interest with corresponded in the sharp jump during the end-of-the-year. However, the contract open interest is flat suggesting that traders were covering short.

1D Chart of PL

1D Chart of PL