The breathtaking rally in palladium appears to be coming to the end.
Rising supply and slowing demand are undermining the price of a metal used to neutralize car exhaust emissions.
Palladium, once the cheapest of the major precious metals, soared from under $500 an ounce in 2016 to over $3,400 last March, leaving platinum and gold far behind.
The reason for the rally was growing demand from automakers who needed more palladium per vehicle to meet tightening emission standards.
However, supply could not keep up, resulting in huge shortages for some. And no less huge profits for others.
Now this is changing.
Electric vehicles (EVs) that don't need palladium are gaining more market share, and automakers are replacing some of the palladium with cheaper platinum in ICE vehicles.
Meanwhile, the supply of recycled cars is growing as those with more palladium are being scrapped more and more.
Palladium has fallen to around $1,600 an ounce, shedding more than 50 percent from its 2022 highs, and analysts are predicting an average price of just $1,150 an ounce in 2027.
Analysts at Morgan Stanley predict that demand from automakers will fall by about 400,000 ounces between 2022 and 2027, while supply from car recycling will increase by 1.2 million ounces, with demand for palladium almost 90% dependent on automotive industry.
This will push the market at around 11 million ounces per year to a near-million ounce surplus in 2027, they said.
Russia's Norilsk Nickel, which accounts for appr. 38-40% of the world's palladium supplies, said its palladium production will fall by 8-14% this year.
Techical picture indicates Palladium to Platinum metal spread erases as much as 50 percent vs. its peaked near 3.0 in 2022, whereas the Bearish market in Palladium has fully launched.
The similar case has happened in early 00s when Palladium to Platinum ratio lost more than 90 percent over decade, as well as Nasdaq - major american BigTech index.
Will the history fully repeat itself. Or will be written in a rhyme. Lets see.
Rising supply and slowing demand are undermining the price of a metal used to neutralize car exhaust emissions.
Palladium, once the cheapest of the major precious metals, soared from under $500 an ounce in 2016 to over $3,400 last March, leaving platinum and gold far behind.
The reason for the rally was growing demand from automakers who needed more palladium per vehicle to meet tightening emission standards.
However, supply could not keep up, resulting in huge shortages for some. And no less huge profits for others.
Now this is changing.
Electric vehicles (EVs) that don't need palladium are gaining more market share, and automakers are replacing some of the palladium with cheaper platinum in ICE vehicles.
Meanwhile, the supply of recycled cars is growing as those with more palladium are being scrapped more and more.
Palladium has fallen to around $1,600 an ounce, shedding more than 50 percent from its 2022 highs, and analysts are predicting an average price of just $1,150 an ounce in 2027.
Analysts at Morgan Stanley predict that demand from automakers will fall by about 400,000 ounces between 2022 and 2027, while supply from car recycling will increase by 1.2 million ounces, with demand for palladium almost 90% dependent on automotive industry.
This will push the market at around 11 million ounces per year to a near-million ounce surplus in 2027, they said.
Russia's Norilsk Nickel, which accounts for appr. 38-40% of the world's palladium supplies, said its palladium production will fall by 8-14% this year.
Techical picture indicates Palladium to Platinum metal spread erases as much as 50 percent vs. its peaked near 3.0 in 2022, whereas the Bearish market in Palladium has fully launched.
The similar case has happened in early 00s when Palladium to Platinum ratio lost more than 90 percent over decade, as well as Nasdaq - major american BigTech index.
Will the history fully repeat itself. Or will be written in a rhyme. Lets see.
Trade active:
Oct 31, 2023
Palladium/ Platinum spread is to deliver more down.
Palladium/ Platinum spread is to deliver more down.