Platinum extends drop on SA supplies

Platinum futures extended a two-day plunge, falling for a third session on speculation that South Africa will increase output. Palladium also declined.

South Africa, which provided 78 per cent of the world's platinum last year, last week took steps to boost power supplies to mines.

Electricity shortages shut mines for five days in January and power supplies have been limited since then. Last week, the government said mines would get 95 per cent of their normal power needs, up from 90 per cent previously.

Platinum is ''under pressure from a combination of fundamental concerns "" the news that the South African mines would get more power, and de-leveraging as investors trimmed positions across the board,'' Robin Bhar, an analyst at UBS AG in London, said today in an e-mailed report.

Platinum futures for April delivery fell $99.70, or 4.9 per cent, to $1,942 an ounce at 9:26 am on the New York Mercantile Exchange.

The metal dropped for a third consecutive session, the longest losing stretch since a four-day decline through January 22. The most-active contract plunged the most in eight years in the previous trading session.

Still, futures gained 26 per cent last month and 71 per cent in the past year before today, outperforming other precious metals such as silver and gold. Platinum reached a record $2,308.80 an ounce on March 4.

Palladium futures for June delivery fell $26.50, or 5.4 per cent, to $468.50 an ounce in New York, falling for a fifth straight session. Last month, palladium gained 46 percent and it rose 40 per cent in the past year before today.

Platinum and palladium are used in jewellery and pollution- control components for cars. Some investors buy the precious metals to preserve value.