Palladium jumps on supply fears

Commodities , Europe , Metals , Palladium , Platinum , Precious metals , Russia , South Africa , Ukraine , USA Mar 11, 2014 No Comments

Palladium pricePalladium touched 785 dollars per ounce last Thursday in London, the highest level for an most-active contract since March 8, 2013. Investors are concerned about the consequences of tensions between Russia and Ukraine on the supply of the precious metal, used mainly by the auto industry in catalytic convertors.

In 2013, Russia was the largest exporter of palladium with a global share of 40%, followed by South Africa with 37%, according to research firm Johnson Matthey London.

After more than quadrupling in 2009-2010, palladium prices have been more-or-less stuck in a range for the past three years until a major break of the established trend-line on Tuesday. The price climbed for the fifth straight week, the longest rally since December 2012, as the U.S. and its allies threaten sanctions against Russia, the world’s biggest supplier, following the incursion into Ukraine’s Crimea region.

The worries come when the market was already dealing with reduced supplies as a result of a nearly six-week-old strike in South Africa’s platinum-group-metals mining sector.

“The overall picture is still very much all about Ukraine and Russia,” David Govett, the head of precious metals at Marex Spectron Group in London, wrote today in a report. “With mutterings of sanctions against Russia along with the continuing situation vis-a-vis strikes in South Africa, it was only a matter of time” before prices rose, he said.

Obama said that the U.S. and its allies will keep raising pressure on Russia to back down in Ukraine. He spoke at the White House after his administration restricted visas for Ukrainian officials and others, including Russians, who it says are threatening Ukraine’s sovereignty.

All depends on the kind of sanctions,” Michael Haigh, the head of commodities research at Societe Generale SA in New York, said in a telephone interview. “There is definitely a lot of concern in the market.”

Platinum futures for April delivery rose 0.9 percent to $1,476.60 an ounce. Earlier, the price touched $1,489, the highest since Sept. 9. Holdings of the metal in exchange-traded products expanded to a record 78.3 metric tons yesterday, data compiled by Bloomberg show.


Pascal Blanc

Pascal has implemented numerous software solutions in the areas of procurement, sourcing, spend management, supplier evaluation and performance. His clients include Fortune 500 companies in Europe, Asia and North America. He is a co-founder of Source & Procure.

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