Only recently has PAL stock price begun to rise again. There appears to be five main catalysts for this:
1.PAL reported Q3 2013 results on November 14, 2013. These did not show profitability, but they did outline a good (and believable) path to profitability in 2014.
2.PAL published a very positive update of its exploration results for its 2H 2013 exploration drilling at its Lac des Iles mine (its main palladium mine) on December 23, 2013.
3.Palladium Nymex futures have begun to rise likely due to recent good world economic news from their December 24, 2013, low of $692.65/ounce. They closed December 30, 2013, at $710.80/ounce. The early December 2013 high was $744.9/ounce. The November 7, 2013, palladium high was $765.00/ounce. PAL is predicting an average selling price of about $800/ounce in FY2014. This forecast is very close to other major analysts' forecasts: Bank of America Merrill Lynch (BAC) - $813/ounce, Citi (C) - $800/ounce, Commerzbank - $760/ounce, and HSBC-- $825/ounce. Citi thinks prices could be up to $900/ounce by the end of 2014.
4.The recent forecast for worldwide auto production is for +5% growth for FY2014. Volumes in Western Europe began to stabilize in 2H 2013, and they are expected to rise in FY2014. Double digit increases are expected in China. This should bring Chinese sales to nearly 18 million vehicles for FY2014 (from about 15 million vehicles in FY2013). In the US, an abnormally old US fleet at 11.4 years on average is expected to drive US sales to 16 million units. Auto parts (mostly catalytic converters) accounted for approximately 65% of palladium demand worldwide in 2012. That percentage will likely be even higher in 2014. The growth in auto sales, if it happens as forecast, should drive palladium demand and prices significantly higher. Further auto sales are expected to increase worldwide at about a 4% per year clip for many years.
5.Beijing enacted the Beijing V standard March 1, 2013. It is similar to the Euro V standard. It will require all new cars to meet tougher emissions standards. It will also ban all cars that don't meet the standard from being sold or registered. This will mean better catalytic converters will be eventually required in all Beijing autos going forward. This will increase the demand for palladium for Chinese cars. Other big cities in China are expected to follow Beijing's lead. I admit I haven't tracked this completely, but the Chinese government does tend to act more quickly than the US and European governments. The forecast is for 18 million new cars to be sold in China in FY2014. It is logical that a lot of these will meet the new emissions standard (will require more palladium).
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