PEAK OF PALLADIUM DEMAND FROM CHINESE CAR INDUSTRY 📈
POSTED BY ALICE
Autocatalyst producers are predicting that, in 2018, the demand for platinum and palladium in the automobile industry will move in opposite directions.
Palladium demand incessantly growing
Palladium is a major component in catalytic converters, which are used to clean up exhaust fumes. A report from Johnson Matthew Plc. recently showed that palladium consumption in the catalytic converters is likely to reach a peak in 2018. This is due to the increasing demand for gasoline vehicles, with the Chinese car sector playing the main role in this. Indeed, the country’s Ministry of Environment Protection committed to cut air pollution. That is why carmakers are needing to adapt by adding more precious metal in their catalytic converters. The country has had draconian anti-pollution measures since 2013; especially when it introduced a set of prohibitions known as the National Action Plan on Air Pollution.
Peter Duncan, the General Manager of market research at U.K.-based Matthey, wrote in the report
“The prospect of significant growth in Chinese palladium loadings has moved closer because it looks increasingly likely that some cities and provinces will implement new regulations early. This could happen as early as next year and would result in a double-digit increase in palladium consumption on Chinese cars.”
Whereas Platinum is in decline
In contrast to palladium, platinum, another precious metal contained in converters, is in very poor shape. Platinum is an important catalyst in diesel engines. But sales of diesel cars have declined. This was a consequence of the scandals of automakers who admitted to cheating in emissions tests to gain regulatory approval.
At the same time, as older ones scrapped, there is a growing supply of metal harvested from used catalytic converters.
The platinum market will move further into surplus in 2018 as a rise in industrial demand is outweighed by the decline in autocatalyst consumption and less investment buying. Matthey added that “mine production will remain weak”.
Sources: Bloomberg / Economist
