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(Kitco News) – Palladium prices hit a new record on Tuesday, reaching $ 1,600 an ounce for the first time, and traders are looking for even more gains in a tense market.
"Palladium is now a leader in precious metals; price makes news and [the] the media has discovered it, "said George Gero, managing director of RBC Wealth Management.
Palladium, historically the cheapest precious metal, is sold at higher prices than gold and platinum. At 10:08 am Eastern Daylight Time, cash palladium was trading from $ 14.20 to $ 1,590.55 an ounce after peaking at $ 1,601.45.
"Palladium has quickly experienced a shortage of supplies, with price increases of nearly 90% since the accelerated rise in the uptrend since last August," says a brokerage note from commodity broker SP Angel.
Information that Russia is planning to suspend exports of precious metal scrap from May to November is one of the most recent factors in rising prices. With South Africa, Russia is one of the two largest producers of palladium in the world.
Supply concerns arise at a time when automotive demand for palladium in catalytic converters is strong. Even as car sales weaken, badysts point out that another factor is boosting demand: increased metal loads in each vehicle to meet tighter emission regulations in a number of key countries.
A US negotiator has said that time will tell if Russia's development will have a significant impact on palladium, but nevertheless said that "the nerves are fragile" and that market players therefore feel more at ease to maintain long or bullish positions.
"The availability of metal is very rare," Afshin Nabavi, head of trading activities at MKS (Switzerland) SA, told Kitco News.
Nevertheless, he added, the continuing regression is not as dramatic as it was a month ago. The regularization of any commodity occurs when nearby prices are more expensive than deferred contracts, which shows that users are willing to pay more to get the goods immediately.
"In addition to the growing supply crisis, major automakers have announced a reduction in the prices of their vehicles sold in China after the country announced that it would reduce VAT. [value-added] the three point tax – raising hopes that car sales in the middle empire, which have been horrific lately, could see a path to recovery, "says a TD Securities research note.
Commerzbank's badysts largely attribute the strength of palladium to speculative interest in the purchase.
Last month, Johnson Matthey issued a report stating that the market remained in a deficit position in 2018. The company announced a record demand of 8.66 million ounces for metal in automotive catalysts and a high consumption of fuel. 39, chemical industry.
Part of the demand has been satisfied by the divestment of exchange-traded funds, Johnson Matthey said. However, since ETFs held only 730,000 at the end of 2018, compared with almost 3 million peaks in 2014, there is not enough metal to close the gap between industrial demand and supply, said Johnson Matthey. Thus, the deficit on the palladium market should "widen considerably in 2019," said the firm.
"Excluding investments, the underlying" structural "deficit in palladium is expected to be close to one million ounces in 2019; even if all the remaining holdings of the ETFs were liquidated, this would not be enough to make up the shortfall, "said Johnson Matthey.
Gero and Nabavi are among those looking for more earnings.
Nabavi commented that the $ 1,600 zone could be a resistance for a while. But if this is violated, "we could reach much higher levels," he said. This will be particularly the case as long as there will be no new sources of supply, but demand will remain robust, he added.
Some badysts have even suggested that it was possible to earn $ 2,000 an ounce, added Nabavi, adding that it "would take a little while". who are left behind.
"I'm expecting more of the same," Gero told Kitco News. "I'm waiting for a tightening. I'm expecting a steady rise in prices because we see fewer bars coming to the[NewYorkMercantile)Exchangefordelivery"[NewYorkMercantile)Exchangefordelivery"[NewYorkMercantile)Exchangefordelivery”[NewYorkMercantile)Exchangefordelivery”
Palladium tends to turn into a "sponge", a powdery / granular form that can be used by the industry, he explained. And, he continued, the strong demand from China for batteries and automobiles.
Warning: The opinions expressed in this article are those of the author and may not reflect those of the author. Kitco Metals Inc. The author has endeavored to ensure the accuracy of the information provided. However, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes. This is not a solicitation to exchange merchandise, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept liability for losses and / or damage resulting from the use of this publication.
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