Palladium has emerged as one of the best performing commodities of 2019. Although there is a global slowdown in the auto sector, palladium demand has continued to rise because of the increasingly stringent emission standards in China (which means increased palladium content in car catalysts).
Recent Price Trends
Palladium spot price breached the $1,700 an ounce mark earlier this week, before it eased 0.8% to settle at $1,668.33. Gold, silver, and platinum prices have generally slid over the last few weeks, but palladium is up by more than 9% this quarter. The metal’s price has jumped by as much as 33% already this year.
While there is a real increase in demand for palladium in the manufacturing sector, a part of the price rise may also be attributed to speculative demand for the metal from investors. People are expecting that palladium prices will rise further.
And some investors are moving away from gold, silver, and platinum because of the recent decline trends in their prices and shifting their investments into palladium. Market analysts say that investors believe palladium supplies are constrained, which means people who have stocks of the metal are not ready to sell at current market prices in the expectation of further price rise.
Tightening Supplies of Palladium
As automotive manufacturers in the US, Europe, and Asia are making strategic shifts towards lower emission vehicles, there is a gradual tightening of the palladium supplies everywhere. European consumers, for instance, are rapidly switching over from diesel to petrol-based vehicles, which predominantly make use of palladium catalysts.
Palladium is primarily mined in South Africa and Russia, and experts do not expect their supplies to increase substantially this year. Globally there are only two primary palladium mines, therefore most mine supply comes as a bi-product of mining nickel or platinum.
UBS analysts have said that it is hard to see that the market will find significant relief as demand for the metal continues to soar while supplies remain constrained. Global trade and geopolitical uncertainties are likely to add to the market volatility going forward.
Longer Term Forecasts Favor Palladium
According to market analysts, while the prices of palladium have already seen a significant jump in 2019, the metal still has ample room to run. Some experts at the recent Denver Gold Forum voiced a view that palladium market is likely to remain tight for at least the next two years.
Therefore, even though the metal is already setting new records by touching $1,700 an ounce, the market expects the price to continue to keep rising for the next couple of years.
This article contains the author's opinions. These are not investment-related recommendations. Do not consider the article as any type of commercial solicitation or an investment product offer.
About the Company
Palladium One Mining Inc. is a Platinum Group Element (“PGE”) Nickel-Copper exploration and development Company. Its assets consist of the Läntinen Koillismaa PGE-Nickel-Copper Project, located in north-central Finland and the Tyko Nickel-Copper, PGE Property near Marathon, Ontario, Canada.
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