Norilsk sees rebound in auto demand for palladium
Reuters | Mon, 18 May 2009 17:30
miningmx.com
[miningmx.com] -- Norilsk Nickel, the world's largest palladium producer, believes demand from the global automotive sector will soon return to pre-crisis levels and that Russia has sufficient metal to supply the market.
Russian stocks of palladium, a state secret, could potentially last for about five years at current levels and supplies from Norilsk itself would not be affected by changes to export regulation, a senior Norilsk Nickel executive said.
"The well-being of the Earth's population is rising and a decline in demand is temporary," Anton Berlin, the head of Norilsk's Market Analysis and Development Department, told Reuters in a telephone interview.
Before the economic slowdown, consumers were "morally and materially" ready to buy new cars, he said, but refrained for fear of having less money for more acute necessities.
"If previously people changed autos every three years, now they think that they can do this after five years," Berlin said in comments approved for publication on Monday.
"Here we have a case of the psychological effect of delayed demand. And we expect demand to rise more rapidly than the economy revives."
Palladium is used alone or in combination with other platinum group metals (PGMs) in auto catalysts to clean exhaust gases.
Berlin said the adoption of more environmentally friendly standards for vehicle engines in Europe and elsewhere would also contribute to a rise in demand for PGMs.
NO SUPPLY DISRUPTIONS
Norilsk played a major role in the abolition of PGM exports quotas in early 2007 and of the monopoly of government PGM exporter Almazjuvelirexport in December last year.
Almazjuvelirexport Deputy Chief Executive Sergei Gorny said in December the abolition of its monopoly could lead to PGM exports being disrupted by bureaucratic delays.
Berlin said that, while the government had yet to adopt some decisions to implement a presidential decree ending the monopoly, he hoped the market would not suffer any shortage of PGMs from Norilsk.
If the prospect of a delay were to arise, the company would take steps to ensure stable supply, he said.
"In spite of what happened in the past, there have been no cases of Norilsk not honouring assumed obligations," he said.
"We keep selling to the same clients. For us, only the bureacracy has changed. If previously we used a state-appointed customs broker, now we have the right to export independently or to choose a customs broker ourselves."
Besides Norilsk, Russia's other main supplier of PGMs are the central bank and the state precious metals and gems depository, Gokhran. Their stocks are a closely guarded secret.
Berlin said last year he thought the state had sufficient palladium stocks to last between one and five years. He said his opinion had changed little since then.
"The law describes Gokhran as a reserve of precious metals and gems, which could be used, in particular, for defensive, industrial and cultural purposes. Therefore there has to be some fixed stock volume," Berlin said.
Palladium sales from Russian state stocks were 960,000 ounces in 2008, lower than in the previous year, meaning that overall palladium supplies from Russia fell 19.4 percent to 3.66 million ounces, Johnson Matthey said in a report.
A substantial decline in exports from state stocks over the last decade might suggest these stocks have been depleted, but Berlin said they would be sufficient to last several years.
"I will not assume the responsibility to say that this will happen in exactly five years, but five years is a more realistic deadline than one or 10 years," Berlin said. |
