Why palladium’s suddenly an especially precious metal

From Bloomberg:

For the first time in more than a decade, palladium is rivaling gold in value. A key component in pollution-control devices for cars and trucks, the metal’s price has surged as much as 50% in about four months, making it at times more expensive than gold. The rally shows few signs of fizzling.

1. What is palladium?

It’s a lustrous white material, one of the six platinum-group metals (along with ruthenium, rhodium, osmium, iridium and platinum itself). About 80% of palladium ends up in the exhaust systems in cars, where it helps turn toxic pollutants into less-harmful carbon dioxide and water vapor. It is also used in electronics, dentistry and jewelry. The metal is mined primarily in Russia and South Africa, and mostly extracted as a secondary product from operations focused on other metals, such as platinum or nickel.

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2. Why is it getting more expensive?

Supply hasn’t responded to growing demand. Usage is increasing as governments, especially China’s, tighten regulations to crack down on pollution from vehicles, forcing carmakers to increase the amount of precious metal they use. In Europe, consumers bought fewer diesel vehicles, which mostly use platinum, and instead chose gasoline-powered vehicles, which use palladium, following revelations that makers of diesel cars cheated on emissions tests.

3. Why is supply so tight?

Palladium’s status as a byproduct to platinum or nickel mining means that output tends to lag behind price increases. In fact, the amount of palladium produced is projected to fall short of demand for the seventh straight year in 2018. That’s helped drive prices to successive records. While some obscure metals are still more valuable, palladium topped gold this month to become the highest-priced among the four most widely traded precious metals.

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Continue reading at Bloomberg…


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