ETF Securities: Auto-Catalyst Demand For Palladium Growing
Tuesday July 22, 2014 11:23 AM
Auto-catalyst demand likely will continue to underpin high-flying palladium, says ETF Securities. The metal ended last week with a 23% year-to-date gain, with the one of the most recent impetuses being worries that possible sanctions over the Ukraine crisis could disrupt supplies from No. 1 producer Russia. Since February 2011, global vehicle sales have increased about 20%, ETF Securities points out. Historically, diesel-powered vehicles relied mainly on sister metal platinum for catalytic converters, while gasoline-powered ones could use palladium. However, ETF Securities says, “in many cases palladium can now be used in diesel catalytic converters at close to a 50-50 combination with platinum compared to near a 30-70 ratio in 2011. Palladium is the primary source for gasoline catalytic converters and the largest market in the world is China. With an average per vehicle PGM (platinum group metals) load near two grams, compared to about four in the U.S., China is increasing its auto PGM loadings, notably due to severe pollution problems.” Palladium is widely expected to be in a supply deficit in 2014. “Although palladium has had a strong run and may be vulnerable to some near-term profit taking, the longer-term fundamentals remain favorable in our view, with escalating risk of further sanctions on Russia a potential catalyst for further price gains,” ETF Securities concludes.
By Allen Sykora of Kitco News;asykora@kitco.com