Palladium Prices Under Pressure, But Some See Strong Fundamentals

Reuters reported that palladium prices are expected to keep falling, but said that some analysts see the metal as oversold. They see palladium prices coming back due to strong supply and demand fundamentals for the metal.
As quoted in the publication:

Spot prices of palladium, mainly used in emissions control systems for cars, trucks and other vehicles, have dropped more than 22 percent this year – the most among precious metals. Gold has fallen 7.6 percent, silver is down 6.1 percent and platinum has tumbled 20 percent. The commodity backlash has been fuelled by the prospect of higher U.S. interest rates, a stronger dollar and weaker Chinese demand. Short positions in palladium futures on the New York Mercantile Exchange have hit all-time highs since June.
“Both platinum and palladium are under speculative shorting pressure, but the situation should reverse over the time,” said Singapore-based ANZ analyst Victor Thianpiriya. “The fundamental supply/demand for palladium will be in deficit over the next three years. We are quite positive about the prices of palladium over the next 12 months.”
Some analysts say palladium prices have fallen more than those of other precious metals due to higher volatility in a less liquid palladium market. Fundamentals for the metal remain strong, they say. Supply has been in deficit for the last five years, and will remain so in 2015 and 2016, according to data from the GFMS metals analysts team at Thomson Reuters. Demand for palladium in auto production is set to hit a record 6.8 million ounces this year and rise another 3.8 percent in 2016, GFMS estimates show.

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