Platinum stocks surge after Amplats shake-up

Shares in speciality chemicals group Johnson Matthey raced ahead on Tuesday morning following the announcement by Amplats that it is to restructure its assets and embark on a cost-cutting programme.

Shares in speciality chemicals group Johnson Matthey raced ahead on Tuesday morning following the announcement by Amplats that it is to restructure its assets and embark on a cost-cutting programme.

Johnson Matthey, the world leader in platinum distribution and the sole marketing agent for Anglo American Platinum (Amplats), released a statement saying that it is looking at the "implications" that this shake-up may have on the companies' relationship.

Platinum prices were most likely the reason behind the move today, jumping to a three-month high after Amplats, the world's largest platinum producer, said that it would cut production.

As part of its restructuring, the Anglo American subsidiary said it would reduce output by 400,000 ounces per annum after putting four unsustainable, high-cost shafts at Rustenburg on long-term care and maintenance. It also said that its Union mines, which produced 254,000 ounces of platinum in 2011, are up for sale.

Analyst Alison Turner from Panmure Gordon said this morning that the Amplats review is "good' for the wider platinum sector and prices. She's said that restructuring will reduce world primary platinum supply by 7%.

"We were already positive on the outlook for platinum taking the view that the South African industry would not deliver production growth to meet recovering platinum demand.

"Following today's announcement from Anglo Platinum we now expect the market to move more rapidly to a larger and more sustained deficit position driving a sustained increase in the platinum price."

Johnson Matthey's shares were up 3.3% at 2,317p by 10:16 in morning trade, helped by a target price upgrade by Bank of America Merrill Lunch from 2,375p to 2,500p. The broker retained its 'neutral' rating for the stock.

Other big players in the platinum industry, such as Lonmin and Aquarius were also making impressive gains on the market, up 4.66% and 8.19%, respectively.

Recommended

Broker safety – your questions answered
Investment strategy

Broker safety – your questions answered

Cris Sholto Heaton answers more of your questions about the safety of stockbroker accounts
25 Mar 2020
How demographics affects stock valuations
Investment strategy

How demographics affects stock valuations

New research suggests that stock and bond valuations are driven by the age of the population – at least in the US.
24 Feb 2020
Do you own shares in Sirius Minerals? Here’s what you need to do now
Stocks and shares

Do you own shares in Sirius Minerals? Here’s what you need to do now

Mining giant Anglo American has proposed a cash takeover of Yorkshire-based minnow Sirius Minerals. Unhappy shareholders must decide whether to accept…
20 Feb 2020

Most Popular

Why we won’t see a house-price crash in 2021
House prices

Why we won’t see a house-price crash in 2021

Lockdown sent house prices berserk as cooped up home-workers fled for bigger properties in the country. And while they won’t rise quite as much this y…
18 Jan 2021
The world’s fund managers are getting very bullish – be careful out there
Stockmarkets

The world’s fund managers are getting very bullish – be careful out there

The latest survey of fund managers shows them to be extremely bullish on all the same things. And that, says John Stepek, means the market is in dange…
21 Jan 2021
Prepare for the end of the epic bubble in US stocks
US stockmarkets

Prepare for the end of the epic bubble in US stocks

US stocks are as expensive as they’ve ever been. How can you prepare your portfolio for a bubble bursting?
18 Jan 2021