The precious metal palladium has seen its prices surge in the last 13 months, reaching highs of over $1100 dollars thanks to increased demand in the automotive industry.
With the decline in popularity of diesel cars, petrol and electric or hybrid cars have filled the gap in the market, but it’s new, clean petrol cars – using palladium in catalytic converters – that are driving the demand in this rare metal.
As of today, the price for palladium is $1113.50 / £809.41 / € 910.81. Palladium saw a 55% surge in Dollar price in 2017, making it the best performing precious metal or commodity for 2017. It also beat platinum prices for the first time since 2001, with the rival metal suffering as its usage in diesel cars slumped.
Modern production of car exhausts now use Palladium in the catalytic converter to reduce pollution emissions.
Petrol car sales driving Palladium demand
Palladium prices have doubled since January 2016 when Volkswagen announced it had falsified diesel emissions info. Ironically, Volkswagen made record global car sales in 2017, proving how good a year it was for car sales – especially new petrol models and electric/hybrid models.
USA Today reported that 2017 saw a drop of 500,000 car sales compared to 2016 figures, but that still put US car sales at 17.1 million for the year. The Financial Times reported similarly, citing reduced annual figures for the big three Detroit manufacturers of Ford, Fiat and General Motors. Dubbed ‘the worst year since the financial crisis’ the statistical decrease in sales looks scary, but the reality is that 2017 was the fourth best year in history for car sales in the US.
The slight decline in the US and UK was compensated for on a global scale by the increased demand in China, where the government are embarking on a large push to clean up their pollution levels. As such, new petrol cars and hybrids are in high demand, and the need for Palladium follows. Nasdaq reported on the sales boost for General Motors in the Asian nation, with other world news sites offering similar conclusions: China wants cleaner transport and is willing to pay for it.
‘A moment in the sun’
With the global deficit in supply expected to keep growing, the price for Palladium should technically stay high in value, but Palladium sellers need to be cautious.
The recent boom period for the precious metal has been described as a ‘moment in the sun’. Palladium is very dependent on the automotive industry for its demand, with 78% of all the metal mined going into car production, but General Motors and other major manufacturers are all predicting a strong decrease in production and sales in 2018, which in turn will hit demand for Palladium and thus drop the price.
The main miners of Palladium are Russia, South Africa and Zimbabwe. There are concerns that these nations may limit supplies to maintain the heightened prices, but this may equally drive buyers to source their palladium elsewhere and the competition will lead to a lowering of prices regardless.