With the threat of additional sanctions against Russia, palladium prices and related exchange traded funds strengthened to their highest levels since 2011.
The ETFS Physical Palladium Shares (NYSEArca: PALL) was up 2.1% Friday, hovering around $78.6 per share, its highest level since late early August 2011. PALL is up 10.5% year-to-date.
Palladium futures were up 2.0%, trading around $806.2 per ounce.
As tensions between Ukraine and Russia escalate, Treasury Secretary Jacob J. Lew stated that the U.S. is ready to impose “significant” measures against Russia, the world’s largest supplier of palladium, if the country foments unrest, reports Luzi Ann Javier for Bloomberg. [Fundamentals Support Palladium, Platinum ETFs]
U.S. Secretary of State John Kerry has said that sanctions targeting Russia’s energy, banking and mining industries are “all on the table.”
The uncertain outlook on Russia supplies has put additional pressure on palladium prices, with mine strikes in South Africa, the second-largest producer, cutting down on supply and increasing auto sales bolstering demand.
“We’re seeing real robust increases in auto sales in major markets, especially gasoline car sales in the U.S. and China,” Mu Li, senior commodity analyst at CPM Group, said in a CNBC report.
Gasoline cars utilize palladium-made catalytic converters to diminish toxic gases from exhaust emissions.
According to Morgan Stanley, demand will outstrip supply for a third year in 2014.
“We already have significant problems with production because of the labor strike in South Africa,” Bart Melek, the head of commodity strategy at TD Securities, said in the article. Sanctions could limit the availability of financing for Russian producers, “impeding the flow of the metals from Russia.”
ETFS Physical Palladium Shares
For more information on palladium, visit our palladium category.
Max Chen contributed to this article.