It could be time for the palladium exchange traded fund to shine as mine strikes, safety stoppages and supply cuts create the biggest palladium shortage in over a decade.
Labor disputes in South Africa and production cuts and depleting inventories in Russia will lead to a supply deficit of 915,000 ounces of palladium, the largest disparity between supply and demand since 2000, reports Nicholas Larkin for Bloomberg. In comparison, there was a 1.26 million ounce surplus in 2011.
“It’s unlikely that supplies of either platinum or palladium are going to rise,” Jonathan Butler, publications manager at Johnson Matthey, said in the article. “We’re assuming that demand is going to remain robust for both metals. Overall, we’re positive on investment demand, that conditions will remain favorable.”
Palladium futures rose 4.6% during Tuesday trading on the new data.
Palladium is used in gasoline automobile for autocatalysts to convert emissions into less harmful substances.
“For palladium, we see some further growth in autocatalyst demand,” specialist chemicals company Johnson Matthey, the maker of one in three autocatalysts, said in the article, projecting autocatalyst demand for palladium will rise 7.5% to a record 6.48 million ounces this year.