Palladium futures rally to settle near a record above $1,100 an ounce

October 22, 2018

New York (Oct 22) Palladium futures rallied Monday, with concerns surrounding supplies from Russia, following U.S. President Donald Trump’s plan to pull out of a nuclear treaty with Moscow, lifting prices to their highest settlement since January, when prices hit a record.

Palladium for December delivery PAZ8, +3.79%  climbed by $37.80, or 3.5%, to settle at $1,107.70 an ounce on Comex after tapping an intraday high of $1,109.60. Prices for the most-active contracts hadn’t settled above $1,100 since Jan. 24. Based on FactSet records dating back to November 1984, they hit a record settlement of $1,109.70 on Jan. 17 of this year.

The metal now trades less than $120 an ounce below the price of gold GCZ8, -0.28% That’s the narrowest price difference between the two metals since 2004, according to a weekly price chart from FactSet.

The metal, which is widely used in the pollution-control catalytic converts on gasoline-powered vehicles, has climbed above what R. Michael Jones, chief executive officer of Platinum Group Metals Ltd., refers to as an “important glass ceiling” on the charts.

“The factors for palladium’s rise are all still in place—growing car sales around the world, popular small gasoline engines with palladium catalysts, big American [sport-utility vehicles] on gas with palladium, and South African platinum mine closures in the works cutting palladium production despite the good price,” Jones told MarketWatch. He pointed out that platinum is the main metal at the South African platinum mines, while palladium is a by-product.

Trump said Saturday that Washington will pull out of the Intermediate-range Nuclear Forces Treaty with Russia because Moscow has been violating the treaty, according to CNN. The arms control agreement between the two nations had been signed in late 1987.

“The Russia dispute on nuclear arms raises a new wild card—sanctions on Russia could lock out 40% of the world palladium supply from the large mining complex at Norilsk [Nickel],” said Jones.

“Regardless of potential for cooling of tensions with Russia[‘s] Norilsk NILSY, +0.81% the largest producer of palladium in the world shows a major shortfall in palladium supply for the world in 2019 in their corporate presentation,” he said.


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