Posted: 2000/12/8 05:33 PM EST
Palladium touches new high despite maverick Norilsk's assurances
NEW YORK - Palladium prices raced above $900 an ounce on Friday, erasing Monday's record levels. The gains came even as Russia's Norilsk Nickel, the world's largest producer, confirmed that it would export large quantities of the metal to Japan from January.
Norilsk chairman Yuri Kotlyar has been talking up the price of palladium with the passion of a dot.com millionaire. In the first days of November he predicted a price of $1,000 an ounce within a few years – he may get his wish within months.
The price has been rising on the combined buying of speculators and industry consumers trying to build physical stockpiles. The market has been consumed by rumours of diminishing global supplies and uncertainty about Russian government export quotas Norilsk must abide by.
Russia produces two thirds of the world's palladium, most of which is used in emissions reducing catalytic converters on vehicles. South Africa accounts for most of the remaining production.
In a statement released on Friday morning, Norilsk's First Deputy CEO Dmitry Zelenin said: "In order to stabilise palladium prices and guarantee stable supplies, Norilsk Nickel intends to guarantee palladium supplies to Japan under long term contracts starting from January 2001."
The Russian government has yet to confirm secretive PGM export contracts for 2001, but Norilsk has the benefit of an unusual 10-year quota and a specific right to export palladium until an unspecified date in the first half of next year.
Norilsk's privileged position may be enhanced if a bid by Alexander Khloponin, CE of Norilsk, to become governor of the Taimyr Autonomous Region is successful. Norilsk is based in Taimyr.
At face value, Norilsk's Japanese export contracts contradict rumours of Russian palladium supplies drying up. However, previous statements by Gokhran (Russia's national precious metals agency) spokesmen have hardly been reassuring. Users of the metal are taking it for granted that they will face supply shocks in the coming year and speculators have joined in the fray to create a volatile market that has seen the price rocket since September.
That has spurred a bonanza for PGM resource groups worldwide, except for hapless Stillwater [NYSE: SWC], but Norilsk has been careful not to appear the spoiler since the company is fretting about defections to rival producers. South Africa's mines stand ready to take up any slack with extra capacity under development, while Canada is undergoing a palladium and platinum exploration boom.
At 19h30 GMT, Palladium was bid at $901/oz. Among the world's major PGM producers, Stillwater closed 1.76% higher at $39.23 and North American Palladium [AMEX: PAL] was unchanged at $9.313. Angloplat [JSE: AMS] gained R11 to R343; Impala Platinum [JSE: IMP] was up 3.6% to R385 and Lonmin [JSE: LON] rose 0.9% to R107.
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