Palladium Price Reaches Record on Mounting Concerns Over Tight Supply

London (Oct 23)  Palladium climbed to a record on concerns about tightening supplies of the metal, which is mainly used in catalytic converters that curb vehicle emissions.

Prices rose as much as 1.4 percent to $1,139.91 an ounce in London. The rally has accelerated in recent days on growing political tensions with Russia, one of the world’s largest producers of palladium. Investors are also piling in, with speculators’ bullish bets at the highest since June.

More broadly, the metal has been supported by consumers turning toward gasoline cars, which tend to use more palladium in autocatalysts, instead of diesel. Palladium is up about 7 percent this year, heading for a third straight annual gain, as analysts predict deeper supply deficits.

Output will trail demand by 481,000 ounces this year and deficits will persist through 2020, leading to the “tightest” market in two decades, Citigroup Inc. said in a note in late September.

Speculators are also increasingly bullish. The net-long position held by money managers has increased each week over the past couple of months, U.S. government data show. The scramble for supply has created a lucrative business of lending the metal, spurring withdrawals from exchange-traded funds.

Bloomberg