Palladium’s Uncertain Future
8 Mar 20190 comments
Unlike other precious metals that performed well in 2016 (gold +20%, silver +23%, platinum +18%), palladium has suffered, up just 5% since the start of the year, and this despite a supply deficit. This relatively poor performance is mainly the result of the emergence of the electric car. But it is also due to the resultant drop in demand for diesel engines that use palladium in their catalytic converters. Then, we can wonder how will be the Palladium future?
This turnaround in its fortunes has led to the collapse of the specialized platinum fund created two years ago in Johannesburg. Nevertheless, Norilsk, the leading global producer of palladium, remains bullish, despite a report by Metal Focus that suggests an increase of 1% in electric car demand would reduce demand for palladium by 100,000 ounces. Norilsk has declared plans to purchase the Russian central bank palladium stocks and investment funds, that, according to the company, are encumbering the market, believing that palladium can establish itself as a major player in the jewelry market, much as platinum has done in recent years.
Some see this strategy as highly risky, with strong competition from South African mines that have seen a 32% leap in production since the debilitating strikes of 2014. Precious metal expert Didier Julienne believes “Nordick should concentrate on being a producer of the 21st Century, and plan its production based on realistic future consumption” rather than risk all on an unproven strategy.
Whilst its palladium future is somewhat uncertain, it remains a highly prized commodity and its recycling is beneficial to sellers, buyers, and not least, the environment.