2017 was most definitely a good year for palladium. There were problems with supply but its demand was ever increasing, thanks to the auto industry. This led to a price increase of 51%. It started the year at $685 per ounce, and finished it at more than $1,000. Will such a high price be a sustainable one?
There are two main factors that will affect its price in 2018.
The demand from the automotive industry for palladium is what drove the price up in 2017. Palladium is used in the catalytic converters of petrol-fuelled cars, popular in the US and China. Drivers in Europe are also looking more favourably at petrol powered cars, following the VW scandal involving emissions rigging in 2015. However, depending on who you listen to you can be led to believe that the demand for new cars is slowing down, as people turn to electric-powered alternatives. Manufacturers of catalytic converters are also said to be looking to replace the palladium with platinum, thereby reducing demand. Further research shows that the Chinese market could well be the saviour for the industry as car manufacturers are being encouraged to use more palladium in an effort to further clean up exhaust fumes.
Decline in Supply
The demand for palladium is far outweighing supply, and it doesn’t look like there is a light at the end of the tunnel. There has been a deficit in the palladium market for more than 5 years and stocks of this precious metal are still falling. Something else is worrying investors and that is the sanctions that have been imposed on Russia, the world’s major producer of palladium.
As of April this year, 2018, the price of palladium has been falling. It experienced a 20% fall from its record high in January. However, this news is not as bad as it appears because the price is still 40% above the precious metal’s 10 year average.
What is going to happen to the price of palladium over the next coming months is a wait and see game. There are a number of factors that will have an effect on the price. This makes predicting a rise or fall a difficult prediction to make.
If you’re interested in investing in palladium or any other precious metal, Indigo Precious Metals will be able to help. Purchases can be made online and payment is accepted in five different currencies.