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Strikes will not affect platinum market: HSBC

The threat of a year of industrial action at South Africa's platinum mines will not affect the market for the metal, the chief commodities analyst at HSBC has told CNBC.

Thousands of striking mine workers in Rustenburg, South Africa, in 2012.
Leon Sadiki | City Press | Gallo Images
Thousands of striking mine workers in Rustenburg, South Africa, in 2012.

South Africa's main platinum producers, Anglo American Platinum, Lonmin and Impala Platinum, were served with strike notices recently, along with some of the country's gold producers. Union members are demanding a minimum wage of 12,500 rand ($1,153) a month, which is around double their current pay.

HSBC's James R. Steel told CNBC that he had envisaged industrial stoppages this year and that he was still bullish on both platinum and palladium, regardless of industrial action.

(Read more: South African miners treated as 'slaves': Union head)

"The underlining supply and demand fundamentals are still tight in the market…and industrial action will push the price higher, but our fundamental view is not based on a lot industrial action or continued industrial action in South Africa," he said.

Many analysts have cautioned over a long rally in platinum prices, with strike concerns now priced in to the metal. Spot platinum gained on Monday after the announcement from the South African unions, although the price was down by 1 percent Tuesday.

Steel also stressed that platinum producers in South Africa were ready for strikes and had a good stockpile prepared for the worst. In HSBC's "Metals Quarterly" for the first quarter of 2014, the firm estimated that platinum prices will average $1,595/oz in 2014 and $1,850/oz in 2015.

(Read more: Why it's time to turn bullish on miners)


HSBC's note said lower production in South Africa - due to production cuts and continued capital expenditure cuts - would keep supply under control while demand would continue to grow, thus creating a deficit in 2014: the first for the platinum market since 2005.

Responding to how the union members will behave in 2014, Steel said, "I think that the rank and file as well as the union membership are clear about where the gold price as well as where the PGM prices are relative to their wage demands and what the producers can afford."

(Read more: Gold hits 6-week high; platinum up on South African strikes)

Joseph Mathunjwa, the president of the Association of Mineworkers and Construction Union (AMCU), told CNBC on Monday the strike was aimed at improving workers' quality of life.

"We want a better living for the mine workers who have been exploited for decades and decades, even after we (South Africa) ushered in democracy… Workers are still paid as slaves," Mathunjwa said on Monday.

The strike threat follows violent labor unrest at mines in 2012, which resulted in multiple fatalities and saw the country's credit rating downgraded by the major ratings agencies.

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