WILL RUSSIA PLAY ITS PALLADIUM CARD?
fm.co.za
By John Helmer, Moscow
What exactly counts as the market for platinum group metals (PGMs) is difficult to tell. The recent price falls of platinum and palladium were fixed in Tokyo, London, and New York on tiny trades of a few thousand or, on some days, a few hundred ounces. What kind of commodity market sets international prices on the sale of less material than can fit into one tourist-class suitcase? A speculators' market, that's what.
Outside the network of telephone links and computers that make the big-city spot-market fixes, Chinese importers recently bought 200 000 oz of platinum - about 20% of Chinese annual consumption - for jewellery
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So, if the consumers of platinum and palladium believe the metals' prices have hit bottom, what do they know that the spot-market players don't? The fact is that the users and the speculators believe the same thing - that the price will start to rise soon because there is likely to be more demand than supply. Palladium supply figures show why they are betting Russia will supply less of the metal to the market this year than in 2000.
The US has imported 89,2 t (2,9m oz) of palladium so far this year - just over half the volume it imported last year. Japan has imported 18,3 t (588 000 oz) to date and will have to raise its purchases almost fourfold in the months ahead to match last year's imports. Analysts expect auto production to be flat compared with last year, or down by no more than 5%.
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So, if Rudakov sticks to his word and prevents further deliveries of stockpile palladium to the market, Norilsk Nickel deliveries will be inadequate to fill demand; Russian supplies would be at least 10% lower this year than last. Demand will exceed supply and, if buying is concentrated in the short period to Christmas, pressure on the price will reverse and it will rise again. Quite soon, and quite fast. |
