Analysis
- Platinum is retesting support around $930 per oz established by the mid-October lows.
- Some dip-buying interest has emerged below $940 per oz, as implied by longer lower shadows on the daily candlestick chart.
- The stochastics remains bearish although the fast line has flattened out, suggesting that bearish selling pressure is fading.
- Still, sentiment remains negative after the 55 DMA crossed below the long-term 200 DMA last week.
- A break below current support would target a test of $880-900 per oz while the 20 and 40 DMAs will provide scaled-up resistance at $969 and $983 per oz respectively.
Macro factors
Lonmin reported sales of 735,747 platinum oz in the year to September 30, 2016, exceeding the sales guidance of 700,000 platinum oz. It attributed this to its smelter clean-up and metal released from improved processing technology. The company gave sales guidance of 650,000-680,000 platinum oz for financial 2017.
Chinese passenger vehicle sales continue to record strong grow, rising 20.3% year-on-year in October, according to the latest figures from CAAM (China Association of Automobile Manufacturers). Sales totalled 19.1 million vehicles in the first ten months, up 15.4% on January-October 2015. There could be a steep drop in Chinese growth in 2017 because the tax incentive on small-engine vehicles is set to expire at the end of the year.
US auto sales fell an estimated 4.4% in October, based on provisional estimates. Despite increased discounts and the trend toward larger vehicle types such as pick-up trucks and SUVs, sales overall were down 0.2% year-on-year in the first ten months of 2016. But passenger vehicle sales in Europe were up 8% in January-September.
Diesel vehicle sales face increasing pressure following various emissions scandals. According to Automotive News Europe, the market share of diesel cars in Europe might sink below 10% by 2030 from 52% at present. Carmaker Renault recently suggested diesels could disappear from most of its European car range.
ETF holdings total 2.36 million oz compared with 2.22 million oz at the end of September after buying interest returned late in October, with holdings jumping by 104,400 oz or 4.4% over October – this was the largest monthly increase since July 2015. But the fact they have fallen around 55,000 oz in the year to date does little to signal a bullish stance among investors.
The net length among Nymex funds/CTAs stands at 20,098 contracts, down from a peak of 55,949 contracts at the start of August. The latest CoT data will be published today due to the US Veterans day holiday on Friday.
The global platinum market will record a 520,000-oz deficit in 2016, according to the latest Platinum Investment Council forecast – deeper than the 455,000-oz deficit it forecast in May. Total supply is now seen falling 2% to 7.73 million oz – the WPIC lowered its expectations for recycling levels due to subdued autocatalyst and jewellery scrap sales. It also sees demand edging up to 8.25 million oz – firmer jewellery and investment demand will offset slower demand from industrial applications, owing to slower usage from the petrochemical sector. Demand for autocatalysts is seen slowing marginally – falling market share for diesel vehicles in Europe will negate overall growth in vehicle sales globally.
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