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This week the precious metal hit $916 per ounce, its highest level since February 2001, spurred by strong industrial fundamentals.
Palladium gained over 3 percent to reach $916 per ounce as of 2:50 p.m. PST on Wednesday (August 16). According to Reuters, the last time prices were that high was in February 2001.
The rally occurred on the same day that the US Federal Reserve released the minutes from its July meeting; during that meeting, the committee voted to keep interest rates unchanged. While Fed announcements tend to influence other precious metals, like gold and silver, it was likely not behind palladium’s price rise — that’s because most of palladium’s applications are industrial.
In fact, the bulk of palladium produced is used in autocatalysts, which filter out pollutants from vehicle exhaust. For that reason, the metal’s demand fundamentals are driven heavily by auto sales, particularly in China and India, as auto sales are slowing in the US. Platinum, which is also used in autocatalysts, remains more expensive, but not by much. Platinum prices rose slightly on Wednesday to hit $981.50.
Palladium prices have been on the rise since the start of the year. This week, Russia’s Norilsk Nickel (MCX:GMKN), the largest refined nickel and palladium producer in the world, noted that palladium prices gained 45 percent year-on-year in the first half of 2017.
The gain was supported by strong demand from the auto sector, with positive factors including rising worldwide SUV sales, a shift from diesel to gasoline vehicles in Europe and tougher emissions legislation in Europe, China and the US. The firm said palladium consumption is expected to reach a new all-time high of 10.8 million ounces, and is calling for a deficit of over 1 million ounces this year.
Palladium company news
At the beginning of August, Platinum Group Metals (TSX:PTM) announced that it continues to advance its Waterberg joint venture project in South Africa. The company’s partners on the project are Japan Oil, Gas and Metals National Corporation and Mnombo Wethu Consultants.
Also this month, North American Palladium (TSX:PDL) reported a return to profitability in Q2 2017 based on higher palladium production and improved prices. The company expects exploration drilling to commence at its Ontario-based Sunday Lake project in Q4, and signed a definitive option agreement on the asset with Impala Platinum (OTCMKTS:IMPUY) and Transition Metals (TSX:XTM) earlier this summer.
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Securities Disclosure: I, Melissa Shaw, hold no direct investment interest in any company mentioned in this article.