Palladium tests 2-year lows, as top miner sees deficit shrinking in 2023

Palladium, a metal mostly used in autocatalysts, fell to a two-year low of USD 1,432.78 per ounce this week and is trading slightly above this level on Wednesday, as concerns over its shortage retreated after top producer Nornickel announced its market forecast for this year.

Why it matters

Late last week, the world’s biggest palladium producer Nornickel reported a palladium market deficit of 0.5 million ounces last year, with volatile prices amid geopolitical tensions and concerns about supply and demand stability. Metal consumption was under pressure due to slow post-pandemic recovery of the car industry, while low demand encouraged large consumers to draw down inventories rather than buy the metal from the market, so the shortage was mostly statistical rather than physical.

Nornickel sees a market deficit of 0.3 million ounces in 2023 helped by strong recovery of carmakers. The miner expects the demand for palladium to post a 4% year-on-year increase to 9.8 million ounces, but the supply is expected to grow by 6% year-on-year, as lower deliveries from Russia will be offset by a recovery in primary production in South Africa and the US, as well as an increase in the volume of metal coming from secondary processing.

The company sees global primary refined palladium production rising 1% to 6.4 million ounces in 2023, while recycling of palladium from autocatalysts and scrap metal is expected to rise 19% year-on-year to 3.1 million ounces.