Palladium ETF Breaks Toward New Records on Strengthening Fundamentals | ETF Trends

The palladium exchange traded fund was pushing toward new record highs, with palladium prices closing above $1,400 for the first time on record, after one of the industry’s biggest consumers of precious metals projected a widening supply deficit in 2019.

The Aberdeen Standard Physical Palladium Shares ETF (NYSEArca: PALL) gained 1.3% Thursday and increased 11.9% year-to-date. The spot palladium was up 1.4% to $1,417.2.

In its recent Platinum Group Metals market report, Johnson Matthey argued industrial demand would outstrip supply by almost 1m ounces in 2019 due to surging demand on stricter emissions standards, the Financial Times reports. Palladium is key component used by the car industry in catalytic converters fitted in petrol-powered vehicles to diminish harmful greenhouse gas emissions.

“The deficit in the palladium market looks set to widen dramatically in 2019, with stricter emissions legislation forecast to stimulate double-digit rises in palladium demand from European and Chinese automakers,” according to the report.

While production shortfalls previous years were buoyed by investor selling, holdings in ETFs are down sharply in the past year to 730,000 ounces, which has left the market without enough liquidity to “bridge the gap between industrial demand and supply”, Matthey said.