Palladium Shoots up on Supply Shortages and Strike_Fears
ETF DatabaseFebruary 28, 2019
Palladium prices skyrocketed to new record levels as strike jitters in South Africa added to a tense market engulfed by a sustained supply deficit.
Chinese equities staged an impressive rally of late, as Sino-U.S. trade negotiations marked significant progress at the last round of talks. Malaysia came third in last week’s list as officials decided to lift a three-year-old moratorium on bauxite mining. Telecommunication shares were also in the news thanks to AT&T’s final victory in a legal battle that blocked its merger with Time Warner. The British currency closed the list as the prospect of a lengthy Brexit delay prompted a rally in the pound.
Palladium Jumps on Strike Woes
The precious metal widely used in the automotive industry soared further over the last week as news of impending strikes in South Africa aggravated supply concerns in a market that has been suffering lately of a supply shortage. Traffic in the sector more than doubled over the last week as investors looked into palladium products to gain exposure to the rising asset.
Workers in 15 South African mining firms have sent notices of a strike, threatening to seize operations in a move that adds to wider industry issues. Fellow miners at gold producer Sibanye-Stillwater have already protested over wages and job cuts. As a result, palladium prices hit a fresh record high of $1,553 per ounce earlier this week, up more than 80% compared to August levels.
Home to the world’s largest platinum group metal’s deposits accounting for over 90% of global output, South Africa was particularly important at this point because normal palladium production is experiencing a shortfall. Norilsk Nickel, the world’s largest palladium producer, said this week that it expects the 2019 deficit to widen to 800,000 ounces, up from 600,000 ounces last year on tighter emissions regulations in all major markets and flat supply. Also, the Moscow-based miner said that strong demand in the automotive industry, mainly for autocatalyst converters, will prompt a 21% jump in consumption that will reach 11.2 million ounces for the current year.
yahoo
