Palladium reached a two-year high in April and performed the strongest compared to platinum, gold and silver. The metal is up 65 percent year-to-date, and while it may have hit its growth ceiling for 2017, its future looks bright.
Case in point: a Reuters survey released in April reveals that prices for all precious metals are expected to rise through to the end of 2018. Palladium is of particular interest because about 80 percent of it is used in autocatalysts. Autocatalysts are contained within catalytic converters, which are used to control emissions in vehicles.
More autocatalysts — and palladium — will be needed as car sales in China grow and as the Chinese government implements stricter vehicle emissions standards in the next several years. Experts predict that electric cars, which do not require catalytic converters, will not pose a threat to palladium sales in the near future as the market for electric cars continues to develop slowly.
Analysts also believe palladium demand could increase in the US depending on government action. As David Beahm, president and CEO of Blanchard and Company, said recently, “if President Donald Trump’s promises to jump start massive infrastructure rebuilding projects, and if there is a significant increase in retail demand for products such as automobiles that utilize palladium, the price of palladium could increase.”
In terms of supply, ETF Securities commodity strategist Nitesh Shah has said that platinum prices “could respond more to localized supply issues” because 80 percent of mined platinum supply is concentrated in South Africa. In contrast, mined palladium supply is more diversified, with just over 40 percent coming from South Africa and just under 40 percent coming from Russia.
Palladium prices are predicted to increase by 22 percent in 2017, and could reach $951 per ounce in 2018. Currently, the bid price for palladium is $814 and the ask price is $819, down from about $827 last week.
Latest palladium mining news
Platinum Group Metals (TSX:PTM) has completed a prefeasibility study for its South Africa-based Waterberg platinum-palladium project, and said last month that it is now working on releasing a feasibility study for it. The company estimates that it will be capable of producing 472,000 ounces of palladium annually over the course of an 18-year life. Platinum Group Metals’ Maseve platinum-group metals mine, also in South Africa, is currently in operation.
Sphinx Resources (TSXV:SFX) recently announced results from a 10-hole drill program at its Green palladium project in Canada. Several holes returned semi-massive chalcopyrite and pyrrhotite mineralization. The latest drill results build on the firm’s surface stripping in 2015, which returned mineralized grab samples from the reef horizon with values of 3.3 g/t, 2.3 g/t and 0.6 g/t palladium, as well as 3.2 percent, 3.3 percent and 0.2 percent copper.
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Securities Disclosure: I, Melissa Shaw, hold no direct investment interest in any company mentioned in this article.