The Strategist

Palladium shortage is pushing prices up

04/23/2021 - 04:33

The price of palladium hit a historic record, approaching the $2.9k level. Structural shortages of the precious metal on the global market are pushing prices up, especially on the back of a strong recovery in demand from the automotive industry.

James St. John
James St. John
On Thursday, April 22, the price of palladium hit an all-time high. According to Bloomberg, the precious metal rose 0.6% during the day to $2891.5 per troy ounce. Almost uninterrupted growth in palladium prices continued for the sixth week in a row. During that time, the price of the metal has risen by a quarter, with quotations rising by more than 4% this week alone.

The high rate of growth in palladium prices is linked to the recovery of the global economy in general and the automotive industry in particular (palladium is used in automotive catalysts).

Prices are responding primarily to a strong recovery in overall car industry demand in the US and China on the back of high vaccination rates. According to the China Passenger Car Association, 5.09 million cars were sold in the first quarter, up 69% on the disappointing first quarter of 2020 and comparable to the same period in 2019. Prices are further supported by continued risks of metal shortages. 

The combination of increased demand for metal from the automotive industry and lower production is adding to the global market's shortage of metal supply. Under such conditions, market participants do not rule out a further rise in metal prices.