Palladium Tumbles as US Alludes to Russian Sanctions Relief

Palladium took a major hit on Monday (April 23) following news that the US may relieve sanctions on Russia’s Rusal. The precious metal fell almost 5 percent, losing the impressive gains it made last week.

The US treasury has been in discussions on how it could potentially lift the sanctions on Rusal, noting that it would provide relief if Oleg Deripaska relinquished control of the company.

“Rusal has felt the impact of US sanctions because of its entanglement with Oleg Deripaska, but the US government is not targeting the hardworking people who depend on Rusal and its subsidiaries,” said Treasury Secretary Steven Mnuchin.

Fears that Washington might extend these same sanctions to major palladium producer Nornickel (MCX:GMKN) due to its relationship with both Deripaska and Rusal led to supply deficit concerns and sent prices soaring in previous weeks.

With the sanctions tension now easing, much of palladium’s rise last week is poised to be erased.

“Palladium prices recently have been caught up with the headlines around Russia, and [Monday’s] selloff is no different,” said Maxwell Gold, director of investment strategy at ETF Securities

“Concerns last week around potential sanctions extending to other Russian metal markets, primarily nickel, are seeing a reversal on [Monday’s] news around a softer US stance toward of Russian metal sanctions,” he added.

Currently, approximately 40 percent of palladium supply comes from Russia, mostly as a by-product from nickel-mining activities.

As of 2:57 p.m. EST on Monday, palladium was down 4.12 percent, trading at US$978 per ounce.

Palladium was not the only metal to plummet following speculation that supply disruptions could ease. Aluminum also trended downward as a response, falling over 9 percent and trading at US$1.03 per pound as of 3:15 p.m. EST

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Securities Disclosure: I, Nicole Rashotte, hold no direct investment interest in any company mentioned in this article.