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Platinum Passes $2,000 for First Time
By Claudia Carpenter & Halia Pavliva

Platinum surpassed $2,000 an ounce for the first time in London and New York after mining disruptions in South Africa squeezed supplies at a time of increased demand.

Platinum for immediate delivery gained as much as $89.75, or 4.7 percent, to $2,001.25 an ounce in London. It traded at $1,974.50 an ounce as of 4:49 p.m. local time.

Platinum futures for April delivery rose $54.70, or 2.9 percent, to $1,976.50 an ounce at 11:46 a.m. on the New York Mercantile Exchange after reaching $2,001.40 earlier, the highest ever for a most-active contract.

``Platinum's surge in price is reflecting the difficult mining conditions that have left producers to cut production forecasts in a market that already is experiencing a deficit,'' said Ralph Preston, a senior market analyst at Heritage West Financial Inc. in San Diego. ``Producers cannot meet demand.''

Prices have advanced for six years as mines in South Africa, source of about three-quarters of the world's platinum, couldn't keep pace with soaring demand from jewelers and automakers. New investment products have added to the squeeze.

``I'm getting a lot of calls asking, `How do I invest in platinum?','' said Derek Engelbrecht, a marketing executive of Johannesburg-based Impala Platinum Holdings Ltd., the world's second-largest platinum producer.

South Africa's state utility, Eskom Holdings Ltd., has asked miners and other industrial customers to cut power use to 90 percent of normal needs. Most of South Africa's mines were shut for five days last month after Eskom ran short of generating capacity.

``The market is saying it doesn't believe we can get this power consistently,'' Engelbrecht said. He estimates annual production was reduced by no more than 100,000 ounces from the power cuts. Barclays Capital director Martyn Whitehead estimates the output cut for the full year at as much as 500,000 ounces.

Assets in platinum-backed shares created by ETF Securities Ltd. represent about 5 percent of annual global production, the company said Feb. 5. Those and similar products have taken about 211,000 ounces off the market since Nov. 1, UBS AG estimated. Supply fell short of demand by 265,000 ounces last year, according to London-based metals trader Johnson Matthey Plc.

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