New York (Platts)--28Jan2008

Power outages in South Africa continues to create havoc with the
country's mining industry and the precious metals markets, with prices rising
considerably on the back of speculative trading.

According to one market analyst, platinum will be affected the most by
the production cutback because that will lead to a greater supply deficit.
Even before last week's power supply problems, analysts were projecting a
significant deficit this year. Now the situation will be even worse.

In response, platinum prices soared to record levels last week in both
the physical and futures markets and there could be further gains this week.
The nearby April platinum contract on the NYMEX was trading at $1,680 at 10:50
am EST, downn 10 cents for the day, so far.

According to John Reade, head of metals strategy for UBS International
Bank, the market badly needs South Africa's platinum production more than it
needs gold.

"We are now concerned that the shortfall in production will need to
trigger a structural change in the platinum market," said Reade. "Initial
calculations suggest that at our current forecast prices, supply deficits in
the platinum market of more than 700,000 oz per annum will result over the
next three years. We do not believe this is possible: the only way the market
can bee brought back to near balance is for higher prices to displace jewelery
demand and encourage scrap and profit taking from investors."

Reade continued: "Our longer-term forecasts are now too low and will be
lifted in coming days. We can raise our one- and three-month forecasts. We now
see platinum at $1,800/oz in one and three months although we caution that
this will likely be a volatile ride."

--Ovid Abrams; ovid_abrams@platts.com