Palladium will rise to its highest in a decade amid increased demand from carmakers and depleted Russian stockpiles, said Stillwater Mining Co., a U.S. producer of the precious metal.
Auto-industry usage will increase as catalytic-converter manufacturers accept the metal over platinum because of its lower price, Stillwater Chief Executive Officer Francis McAllister said. The Columbus, Montana-based company predicts global auto output will rise to 72.8 million units in 2011 from 64 million units this year.
“We have a perfect storm going on with the palladium price right now,” the CEO said Aug. 11 in an interview in New York.
Palladium for immediate delivery gained $5.50, or 1.2 percent, to $475 an ounce as of 3:10 p.m. in London. Since trading at $1,125 in January 2001, its highest price since at least 1993, palladium has dropped 58 percent.
The metal tumbled as Russia sold palladium stockpiles accumulated during the Cold War. McAllister said the inventories have now been depleted.
“Is it going to be $700 or $800 next year?” McAllister said. “My guess is yeah.”
Palladium last traded at $700 or higher in April 2001.
Platinum dropped $9.75, or 0.6 percent, to $1,520.50 an ounce in London trading. It advanced 20 percent in the past year, while palladium increased 72 percent.
Norilsk Stake
Stillwater is 51 percent owned by Russia’s OAO GMK Norilsk Nickel, the world’s biggest palladium producer, and operates the Stillwater and East Boulder mines in Montana. Norilsk is considering selling the stake and said in June it had a shortlist of bidders.
Stillwater hasn’t achieved its objective of growth under Norilsk’s control, McAllister said. The Russian company may sell to the public or another investor, he said.
“We would like to be involved in what they do, but it’s their plans,” he said. “If they sell it to another investor, we would like to have that investor be somebody who would be willing to move with us in building the company and make it prosperous and sustainable.”
To contact the reporter on this story: Laura Marcinek in New York lmarcinek3@bloomberg.net