Palladium has more than doubled since the beginning of 2016, outperforming other major precious metals, dwarfing not only platinum (platinum) of its peer group, but also the almost direct price of gold.
Photo: February 2017, Russia's Kasimov, non-ferrous metal factory palladium gold bars. REUTERS/Sergei Karpukhin
Supply is tight, severe shortages and a resurgence in speculative buying are expected to bring palladium near record highs after a nearly 30% jump in prices in seven weeks.
Palladium is currently trading near $1,060 an ounce, just short of the record high of $1,138 set in January. Palladium is mainly used in automotive catalytic converters.
"We are in a structural supply shortage, which is unlikely to be resolved in the next two or three years." Marcus Garvey, an analyst at ICBC Standard Bank, said.
"Prices may continue to rise."
Johnson Matthey (JMAT. L), the automotive catalyst maker, expects a shortage of 239,000 ounces this year. The research institute, GFMS, predicts a decrease in supply and an increase in investment, and predicts a shortage of more than 1 million ounces per year in the three-year period up to 2020 in a palladium market of about 10 million ounces per year.
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This gap is difficult to replenish because palladium is a by-product of other metals, such as platinum and nickel, and South Africa, the main producer, is closing unprofitable platinum mines.
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