In confirmation, Marc Ground, commodities strategist from Standard Bank said Tuesday that their models showed that roughly 480 000 ounces of platinum were at risk (unprofitable on a cash-cost basis) at current prices. This he said was approximately 6 mines mostly run by Amplats and equated to 10% of South Africa's production.

This is a marked increase in the bank's 334 000 risk ounces and four Amplats mines indicated in its June report.

Bearing in mind that the abovementioned numbers are all historical and with Eskom looking at price increases of 14% and above and some mines currently negotiating wage increases the potential for labour disruptions is high. Throw competing unions into the mix and you have a potentially lethal concoction.

Aquarius Platinum's CEO, Stuart Murray said in its latest production update: "Unfortunately, as has been well flagged by many industry participants, the likelihood of industrial action over the South African winter is high, largely as a result of inter-union rivalries. Aquarius is by no means immune to this threat, and intermittent unlawful industrial action has occurred at one of Kroondal's four shafts in July".

Eoin Treacy's view The platinum market is considerably smaller than that for gold or silver not least because of its rarity. An additional consideration is that supply of the metal is dominated by South Africa so labour, energy or political events in that country can have an outsized effect on pricing, as last occurred in 2008.

If mines are uneconomic at current platinum prices then supply will invariably be shuttered if prices fall further. Natural gas offers an excellent recent example of just such an outcome. Prices fell until new supply stopped coming on line, low pricing attracted new sources of demand and this allowed prices to begin to recover. Platinum prices at today's levels are likely to contribute to supply destruction.

On a relative basis, platinum has been trading below the price of gold since August. This is the longest time in a century that platinum has remained so cheap relative to gold. (Also see Comment of the Day on February 29th) . However, a catalyst is required to reinvigorate demand.

In absolute terms platinum is retesting the $1400 area where it has at least paused. A sustained move below Tuesday's low at $1479 would be required to check short-term scope for an additional relief rally. A sustained move above $1500 will be needed to suggest a return to demand dominance beyond the short term.

Platinum miners such as Lonmin, Northam Platinum, Platinum Group Metals, Anglo American Platinum, Eastern Platinum, Jubilee Platinum and Impala Platinum are trending towards their 2008 lows. They will need to break their progressions of lower rally highs to begin to suggest returns to demand dominance. Platinum Australia and Aquarius Platinum are underperforming even these.