Palladium Falls to 9-Month Low on Credit Crunch; Platinum Drops
By Claudia Carpenter
bloomberg.com
Aug. 22 (Bloomberg) -- Palladium dropped to a nine-month low in London on speculation a credit crunch is prompting investors to sell the metal used in cars and jewelry. Platinum also declined.
Palladium has fallen for seven days, the longest selloff since December 2004. Hedge funds and other large speculators have reduced their ``net-long'' positions, or bets on higher New York palladium futures, to the lowest since April, figures from the U.S. government show.
``There could be a need to raise cash so palladium has gotten hammered as a consequence,'' said Peter Ryan, a senior consultant at London-based research company GFMS Ltd. ``Not many weeks ago these investor positions were at record levels.''
Palladium for immediate delivery dropped $1, or 0.3 percent, to $321.75 an ounce as of 12:20 p.m. in London, after earlier today trading at $315.75, the lowest since Nov. 17.
Platinum fell $2.50, or 0.2 percent, to $1,239 an ounce.
Palladium inventories are probably more than one year of global supply, while platinum stockpiles represent about three months of production, Ryan estimated. Palladium has dropped 3.7 percent this year while platinum is up 9 percent.
``The investment case for palladium has always been weaker as it has relatively poor fundamentals,'' said Helen Henton, head of commodity research at London-based Standard Chartered Plc. ``Consequently it has been harder hit.''
The net long in New York palladium futures was 10,024 contracts as of Aug. 14, more than 50 percent higher than bets on higher platinum prices, figures from the U.S. Commodity Futures Trading Commission show. ``Palladium has been in surplus for a few years now, and the assumption is that that surplus has been purchased by investors,'' said Matthew Turner, an analyst at Virtual Metals Consulting in London. ``If those long positions are liquidating, palladium will get hit hardest.''
To contact the reporter on this story: Claudia Carpenter in London at ccarpenter2@bloomberg.net
Last Updated: August 22, 2007 07:29 EDT |
