Platinum and palladium futures drop to two-week lows

Palladium futures declined on Tuesday, after the largest platinum producer, Russia, announced it wont further split up its western neighbor, Ukraine, following Sundays Crimea referendum, which showed the region wanted to join Russia. Platinum also touched the weakest level since March 4.

On the Comex division of the New York Mercantile Exchange, platinum futures for settlement in April traded at $1 464.55 per troy ounce at 15:55 GMT, down 0.26% on the day. Prices shifted in a daily range between $1 470.15 an ounce and $1 449.65 an ounce, the weakest level since March 4.

South African workers at the worlds three largest platinum miners have been on strike for higher wages for almost two months. The country is the top producer of platinum in the world and second-largest for palladium.

The strike has resulted in the loss of 440 000 ounces of platinum so far, as 44 working days have already been lost and the daily production averages around 10 000 ounces.

Earlier this month, the Association of Mineworkers and Construction Union (AMCU), which represents most of the South African mining workers, had made a compromise, saying that it will accept the increase of the basic entry wage to 12 500 rand ($1 200) per month in three years time, which is more than double the current levels, instead of immediately.

However, the three largest platinum miners are sticking to their latest offer of increases of up to 9%, saying this is the most they can afford at the moment amid rising production costs and depressed platinum prices.

Workers at South African gold mines are also willing to join their colleagues at the countrys platinum sites, who have not returned since they left their working places on January 23. For now, gold mining workers strike is postponed, as the Johannesburg Labor Court postponed on March 14 its decision on ruling whether the strike would be legal.

Meanwhile, on the Comex division of the New York Mercantile Exchange, palladium futures for settlement in April traded at $766.80 per troy ounce at 15:56 GMT, down 1.24% on the day. Prices shifted in a daily range between $774.80 an ounce and $759.20 an ounce, the weakest level since March 4. Palladium futures reached $787.60 on March 14, the highest since March 8, 2013 as tension between the largest palladium producer Russia and Ukraine escalated.

Palladium prices were pressured today as Russia’s President Vladimir Putin said in Kremlin that his country had no intention to harm Ukraine, while he saw the referendum in the Black sea peninsula as “open, fair”. Putin also said that he had no ambitions in other areas of Russia’s western neighbor.

Putins statement came after the US and European Union warned Moscow not to annex Crimea after Sunday’s referendum, according to which 97% percent of voters backed the pro-Russian local government’s decision to separate from Ukraine and join Russia. While the United States, European Union and the Ukrainian government deemed the referendum illegal, Russia said it was in consonance with international law.