Mining Journal - January 28, 2000, Volume 334.
No.8567
Lead Story:
Palladium driven to record
A combination of strong demand from automobile manufacturers and renewed concerns over
supplies from the dominant producer, Russia, propelled palladium to new record price levels
this week. There had been excitement in the palladium market at the end of last year (MJ
December 24/31, p.504), but the situation calmed somewhat, when it was learned that Russia
had re-entered the spot market. This week, however, the palladium price soared, rapidly
rising through the previous record high to touch US$480/oz at one point. This compares with
US$436/oz at the beginning of last week and around US$325/oz one year ago.
In 1999, world supply of palladium amounted to 7.7 Moz, versus demand of 8.3 Moz, and
Russia contributed about two thirds to total supply. Over the past few years supplies have
been frequently delayed by bureaucratic hold-ups, but last year it was hoped that the setting
up by Russia of a ten-year system of quotas would return stability to the market. This has not
been the case; supplies via long-term contracts have been sporadic and, and a Russian
presence on the spot market has been almost non-existent, until very recently.
Palladium's main end use is in autocatalysts, and it is a recent development in the US that may
have provided the spur for the latest price surge. Andy Smith, precious metals analyst with
Mitsui Bussan Commodities Ltd, points out that just before Christmas, President Clinton
made an announcement that over the next few years the increasingly popular sports utility
vehicles, minivans and light-duty trucks (which now comprise 50% of the new cars sold in the
US) will have to comply with the strict emission standards that are applied to cars. To achieve
this, these vehicles will have to be fitted with autocatalysts, heavily loaded with palladium. This
rather than questions over Russian palladium exports may be the main driving force behind this
week's price surge. |
