Analysts Expecting Higher Palladium Prices in 2016

Investors following the palladium market will be glad to know that there are some positive sentiments in regards to palladium prices. Palladium– despite having dipped in early April – is trading at about 0.4 percent higher than in March, with an April 15 price of $568 per troy ounce.
While the gain is nominal, it does bring with it a degree of encouragement that palladium prices will be on their way up in the short term. Prices are still 25 percent lower than in 2015, but year to date the metal has seen a 2.3 percent increase in an environment governed by weak economic data.
That said, FocusEconomics expects to see palladium prices improving in the coming quarters.

In a recent sector update, FocusEconomics highlights that March car sales in the US – a significant driver of palladium prices as palladium’s primary use is in catalytic converters – came in below expectations. While this would typically be a large strike against palladium prices increasing, a weaker US dollar urged the metal on.
“Prices are expected to rise slowly in the coming quarters. Improvements in the global economy and a supply deficit should propel steady gains.” The firm’s Consensus Forecast project shows that analysts are of the mind that palladium prices will average US$626 per troy ounce in Q4 2016. Furthermore, the consensus is that prices will rise to an average of $724 in Q4 2017.
For the most part, the analysts surveyed in the consensus “see the price of palladium rising by Q4 2016.” The disconnect, however, remains on the extent of the recovery. “For Q4 2016, the maximum price forecast is USD 698 per troy ounce, while the minimum is projected to be USD 550 per troy ounce.” the report notes.

Palladium price forecasts

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Delving deeper into the outlook for palladium prices, investors in the metal might be interested to know what some of the top minds in the sector are anticipating in terms of price activity for the next quarter and end of year. Here’s a sample:

• ABN AMRO: expects to see a Q2 2016 palladium price of $592. Meanwhile, at year end the firm expects to see prices increase to $650

• ANZ: expects to see a Q2 2016 price slightly lower at $525. Still more modestly, the firm’s Q4 2016 price will be holding on to a continued $550.

• BMO Capital Markets: more optimistic than ANZ, BMO sees prices for the second quarter to be averaging $575. Meanwhile, year end the firm hopes to see $600 per troy ounce.

• JP Morgan: likely the most optimistic estimate included on the FocusEconomics report, JPM is expecting a $675 per troy ounce in Q2 prices. While the firm sees prices reaching $700 in Q3, its Q4 expectation is slightly lower at $692.

With current palladium prices at $583.75, it will be interesting to see which firms are on the mark and which have missed it.
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Securities Disclosure: I, Vivien Diniz, hold no direct investment interest in any company mentioned in this article.