Palladium Price Up On Supply Issues

Posted by: : Paul EbelingPosted on: March 30, 2014 Palladium Price Up On Supply Issues

Palladium Price Up On Supply Issues

Palladium prices have risen to their highest level in 2.5 yrs on Russian supply concerns.

Basic economics apply when supply tightens, and  demand increases, prices usually go up, Palladium is showing that potential.

Russia is the world’s largest supplier of Palladium. The rare Grey metal is a Key component in automobile catalytic converters. As the world economy slowly recovers, so have auto sales, and demand for Palladium is growing.

However, the  supply is going down.

South Africa is the 2nd largest producer of Palladium, and miners there have been striking for longer, and there is no end yet. The impacted mines have been idle for more than 2 months, causing 2 problems.

1. With no new Palladium being mined, inventories at the mines are being exhausted to meet the increased demand.

2. The mine infrastructure is degrading, making repairs lengthy and expensive.

Now, more than 50% of the world’s supply is mined in Russia.

Palladium is a major component of Russian’s mining industry, and a Key component in Russia’s economy. The Russian government has dominated Palladium sales and considers the nation’s stockpile of Palladium a state secret. It has also used its control over Palladium as a political tool in the past.

Any escalation in sanctions between the West and Russia has the potential to raise Palladium prices higher.

The Obama administration’s  sanctions against Russia for its role in annexing Crimea is a double-edged sword. One target being discussed on the Hill is Russia’s mining industry, and if there comes a ban on Russian Palladium it would hurt Russia’s miners and the economy, and also hurt American carmakers, which would have to buy Palladium from supply accumulated by speculators, price would rise.

Stay tuned, this is an ongoing story in the precious metals sector…


Paul Ebeling

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Paul Ebeling

Pattern Recognition Analyst, equities, commodities, forex
Paul Ebeling is best known for his work as writer and publisher of “The Red Roadmaster’s Technical Report” on the US Major Market Indices™, a highly-regarded, weekly financial market letter, where he enjoys an international audience among opinion makers, business leaders, and respected organizations. Something of a pioneer in online stock market and commodities discussion and analysis, Ebeling has been online since 1994. He has studied and worked in the global financial and stock markets since 1984.

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