Palladium futures hit an all-time high on Tuesday, as rising U.S. car sales and the global economic recovery from COVID-19 bode well for the metal used in catalytic converters that cut gasoline engine emissions.
“As the thought of bringing peace back grows stronger and stronger, and personal transportation is likely to become popular in the post-COVID world, palladium, which is needed in almost every car, is a link of an all-time high,” said R. Michael Jones. , Chief Executive Officer of Platinum Group Metals Ltd. PLG,
Metal demand “is growing steadily on a per machine basis as emissions standards tighten around the world,” he told MarketWatch. “Production remained at the same level, and no funds were invested in it. Compression continues. Replacement is difficult, expensive and time-consuming. ”
On Comex, the most active palladium contract in June is PAM21,
is trading at $ 3,019 an ounce, the highest daily level on record, according to Dow Jones Market Data. Prices were down $ 3.80, or 0.1%, to $ 2,977.60 an ounce on Tuesday, after hitting a record high of $ 2,981.40 on Monday. They are trading more than 20% YTD, after rising nearly 29% in 2020, marking the fifth annual rise in metal prices.
Since April, palladium prices have been periodically hitting new all-time highs, surpassing the highs last seen in 2020.
To read: Palladium prices hit record highs: rally continues for sixth consecutive year
Jones said car use accounts for 84% of palladium demand, and as public transport loses its appeal during the pandemic, cars are perceived as a “safer” way to travel. “The demand for cars is returning quickly and the market is seeing it,” he said.
Meanwhile, the related metal, platinum, is inferior to palladium as its main use is in diesel-powered vehicles, he said. “This automotive sector is still out of favor after the famous diesel gates,” he said, referring to the 2015 Volkswagen emissions scandal. July platinum 21 zloty,
rose $ 2.40, or 0.2%, to $ 1,232.50 an ounce, trading about 14% higher for the year so far.
The rise in palladium prices compares to a year-to-date gold loss of nearly 7% with the price of the June GCM21 yellow metal contract.
trading at $ 1,775.20 an ounce, down $ 16.60, or 0.9%, on Tuesday.
Limited supply and strong demand for palladium helped push the metal prices higher than gold prices in 2019, and since then, the price of palladium has remained above the price of gold for most of the time.
Meanwhile, demand for palladium and platinum may soon gain new reason for growth amid their potential use in lithium batteries, Jones said.
Electric vehicles “were the only propulsion system that didn’t have significant amounts of platinum or palladium,” but they may soon need these metals, he said, pointing to news related to his company’s subsidiary.
Lion Battery Technologies, founded by Platinum Group Metals in partnership with Anglo American Platinum ANGPY,
supports the use of palladium and platinum in lithium batteries, according to a recent Mining Weekly report.
According to Jones, palladium and platinum are known as “powerful catalysts.” “In a world where we want cleaner and more efficient [vehicles,] these special metals are in demand. “