Palladium Market Sees Volatility Amidst Global Economic Shifts and Supply Constraints
The international palladium market, crucial for its use in gasoline vehicle emission purification catalysts, continues to experience price fluctuations around the $1,000 per troy ounce mark. Despite the dampening effect of China's sluggish economic recovery, a decrease in production from Russia—responsible for about 40% of global supply—coupled with other factors, is exerting upward pressure on prices. Market analysts are closely watching the $1,000 threshold, predicting that stricter emission regulations worldwide could bolster demand for catalysts and potentially drive up palladium prices in the long run.
As of midday Japan Standard Time on March 1, palladium futures in New York hovered around $1,033.53 per troy ounce. The year began with prices peaking at $1,102 but saw a dip to $860.50 by February 13, reflecting the market's volatility. Production forecasts for 2024 suggest a continued decline, with expected outputs ranging from 2,296,000 to 2,451,000 troy ounces, marking the second consecutive year of reduction as projected by the Russian mining powerhouse Norilsk Nickel (Nornickel).
The market's dynamics are further complicated by China's slow-paced economic revival and the lukewarm reception of expensive electric vehicles (EVs). This context, however, is set against a backdrop of increasingly stringent vehicle emission standards worldwide, necessitating the use of more palladium in emission control systems. Tetsu Yoshida, a commodity analyst at Rakuten Securities, Inc., highlighted the anticipated rise in palladium usage due to the need for advanced purifiers to comply with tighter regulations.
Additionally, factors such as buoyant stock market indices and potential interest rate cuts in the U.S. hint at an economic upturn, which could further stimulate palladium and platinum (PGM) futures prices.
Yoshida expressed confidence in the palladium price maintaining its support level, suggesting, "The price is not likely to fall significantly below the $1,000 mark. It is more likely to rebound while maintaining a certain level," indicating a cautiously optimistic outlook for palladium in the face of regulatory changes and economic indicators.
