Platinum Gains in Asia on Concern South African Output May Fall

By Dave McCombs

July 8 (Bloomberg) -- Platinum gained in Asian trading for the first time in five days amid concern that a power shortage and other mining restrictions in South Africa, the world's biggest producer of the metal, will limit supply.

Lonmin Plc, the world's third-biggest platinum producer, yesterday said output of the metal would be cut by between 5,000 and 10,000 ounces after a water leak forced it to temporarily close a smelter June 30. Normal operations resumed yesterday.

``The market's sensitivity to mine production issues in South Africa remains very much in place,'' Darran Grabham, an analyst at Standard Bank Group Ltd. in Johannesburg, wrote in a report e-mailed today. `` Although this relates to electricity supplies, further evidence of fragility has emerged over recent days with news of the closure of Lonmin's troubled number one furnace.''

Platinum for immediate delivery gained $20.85 to $1,995 an ounce, at 12:26 p.m. in Tokyo, 1.1 percent higher than yesterday in New York. Platinum has gained 31 percent this year and touched a record $2,301.50 an ounce March 4.

Platinum for June delivery in Tokyo gained 23 yen, or 0.3 percent, to 6,762 yen a gram ($1,963 an ounce) at the 11 a.m. break on the Tokyo Commodity Exchange.

Platinum production fell short of demand in eight of the past nine years, according to Johnson Matthey Plc, maker of one- third of catalysts used in pollution-control parts for engines. The deficit will be about 260,000 ounces this year, London-based Blue Oar Securities Plc said in a report in May.

To contact the reporter for this story: Dave McCombs in Tokyo at dmccombs@bloomberg.net