The ETFS Physical Palladium Shares (NYSEArca: PALL) is this year’s top-performing physically-backed precious metals exchange traded fund, but amid signs of easing labor tension in South Africa, platinum group metals have retreated in recent days.
“The strike premium on the platinum price appears to have been removed following news of a possible agreement between the three biggest producers and the AMCU. Platinum is now trading below the levels seen before the strikes began in January, indicating markets have overreacted to the news. We remain bullish both platinum and palladium and believe that prices will recover in the coming months,” said Simona Gambarini, associate director and research analyst, at ETF Securities in a note.
PALL has spent most of this year soaring on the back of several fundamental catalysts, including economic sanctions against Russia and the aforementioned labor woes in South Africa. The countries are the two largest palladium producers. [Mine Strikes Push Palladium ETF Higher]
Although the so-called strike premium is waning, PALL is trading higher for a third consecutive day and is modestly higher over the past week. The same goes for the ETFS Physical Platinum Shares (NYSEArca: PPLT).
“We believe platinum will be the most hit by the news of a resolutions as over 70% of production of the metal is concentrated in South Africa. However, given the minimal strike premium priced into platinum prices now and a pick-up in global demand, we believe the correction will be short-lived,” said ETF Securities.
A calmer labor environment in South Africa is unlikely to ameliorate deep, expected palladium and platinum deficits for this year and 2015. [Supply Deficits Seen for Platinum Group Metals]