Projected shortage of palladium lifts prices nearly to all-time record high

January 7, 2018

London (Jan 7)  Palladium is within touching distance of a record high amid a looming shortage of the metal used to curb harmful emissions from gasoline-fueled vehicles.

Metal for immediate delivery nudged 0.3 percent lower to US$1,096.45 per ounce on Friday, just shy of its all-time best of US$1,125 in 2001.

Metal for March delivery was 0.4 percent lower at US$1,090.15 on the New York Mercantile Exchange, still close to the record for the contract hit this week.

“Prices have continued to rally, building on last year’s gains, with investors anticipating that 2018 will be another great year,” ABN Amro Bank NV currency strategist Georgette Boele said.

“But I’m not that optimistic. For a while already that optimism has been built too much on the recycling of already known positive news,” she added.

The metal last year surged 56 percent, making it one of the top-performing commodities, as investors grappled with the possibility of a shortage as demand from the auto industry grows, especially in China.

Citigroup Inc forecast the metal would be in a deficit of about 835,000 ounces this year.

The bank in a report last month forecast that autocatalyst consumption would continue to rise, breaching 8 million ounces this year, although to some degree offset by sizable increases in autocatalyst scrap.

Gold rose US$0.70 to US$1,322.30 per ounce and silver picked up US$0.02 to US$17.29 per ounce, while copper slipped US$0.03 to US$3.23 per pound.

Meanwhile, oil had its strongest opening week for any year since 2013 as refiners and exporters whittled away at crude inventories tucked away in US storage tanks.

Futures rose 1.7 percent this week in New York.

The pull on oil stockpiles in the world’s biggest economy last week accelerated to 7.42 million barrels, a level last seen in early August last year.


US inventories are shrinking at a time when OPEC and allied producers, including Russia, are working to trim a global glut that triggered the 2014 market crash.

“We have supportive elements in the market that didn’t exist before,” Mizuho Securities USA Inc director of futures Bob Yawger said in New York.

With supplies declining and a healthy global economy, “all the pieces are in place,” he added.

Oil in New York has reached a level where profits are high enough to encourage a further expansion in US drilling, compounding speculation that OPEC members’ efforts to tame the oversupply might prove self-defeating.

West Texas Intermediate crude for delivery next month fell US$0.57 to settle at US$61.44 per barrel on the New York Mercantile Exchange. The contract’s Thursday settlement at US$62.01 was the highest close since December 2014.

Brent for March settlement lost US$0.45 to close at US$67.62 on the London-based ICE Futures Europe exchange.

US oil output last week rose to 9.78 million barrels per day, near a record high, US Energy Information Administration data showed.

Gasoline inventories jumped by 4.81 million barrels and distillates increased by 8.9 million, the data showed.

Wholesale gasoline dropped US$0.02 to US$1.79 per gallon and heating oil declined US$0.02 to US$2.06 per gallon, while natural gas tumbled US$0.09, or 3 percent, to US$2.80 per 1,000 cubic feet.


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