Platinum continues to perform exceptionally well, reaching a record high of over US $2,300 an ounce in March 2008.  Escalating prices have been due primarily to the power supply crisis in South Africa, which forced major producers including Anglo Platinum and Impala Platinum to temporarily halt operations in late January.  The lack of power generating capacity in South Africa will not only affect output in the short term but has the potential to delay new projects by months or possibly years. Amid the power-related mining slowdown in South Africa, it is estimated that platinum output may be cut by as much as 700,000 ounces in 2008, approximately 13 percent of the country’s total output in 2007.

High platinum prices are also occurring in part due to the creation of a new exchange-traded fund (ETF) for platinum.  The fund, created in April 2007 by UK-based ETF Securities, has boosted demand for the metal in an already tight market.  Labour problems incurred by the major platinum producers have also driven up prices. Platinum is produced mainly in South Africa (80%) and Russia (15%), with the rest of the world accounting for only 5% of the world’s supply.

Palladium continued its modestly strong performance through 2007, trading at US $364 per ounce on December 31, 2007 compared to US $332 on December 29, 2006, an increase of 9.34%.  Since early 2008, palladium prices have been on the rise, bolstered by a strong platinum performance and power-related mining disruptions in South Africa.  The metal rose to a six-year high of over US $570 per ounce in March 2008 and averaged $445 per ounce in the first four months of the year.  London-based metals consultancy GFMS believes that mining and smelting problems in South Africa and reduced output of the metal in Russia will continue to reduce world supply while the demand for autocatalysts, primarily in Asia and India, remains strong.  The firm predicts that the metal could trade as high as $500 in the coming months.  Russia is by far the biggest producer of palladium, followed by South Africa.