A confluence of factors have propelled palladium to multi-year peaks in the past few days. Recent highs above $800 per ounce representing the highest level since March 2011, and for some a march towards 2001′s all-time high of $1,090 is considered a very real possibility.
I am amongst those who reckon that palladium is poised to enjoy further solid price appreciation, and here I outline the three major factors which should continue to drive the metal skywards.
Russian shipments on the wane
The escalating political crisis in Ukraine has been a significant driver of palladium’s ascent in recent weeks, with Russia’s alleged involvement in the conflict prompting the US and the European Union to discuss imposing heavy economic sanctions on the country.
Norilsk Nickel is the world’s largest producer of the precious metal, and last year the company produced 2.58 million ounces of the material, or about 40% of total global supply. So the possibility of trade restrictions being placed on Russia could be catastrophic for metal supplies.
And over the long-term, concerns have been voiced that planned production ramp-ups in the country will not be able to keep pace with demand.
In addition to this, Russian stockpiles have been an important source of supply for many years. But with these reserves pretty much empty sales have nosedived in recent years – indeed, metals refiner and autocatalyst builder Johnson Matthey expects sales last year to have rung in at just 100,000 ounces, down markedly from 250,000 ounces in 2012 and 750,000 ounces in 2011.
With stockpile shipments expected to fall again this year, and escalating troubles in Eastern Europe threatening the flow of mined supply to the market, the Russian Bear’s reputation as a major palladium provider is very much under threat.
Escalating production problems in South Africa
Palladium supply is also dwindling due to the effect of crippling strikes from mining workers across the platinum group metal (PGM) hotbed of South Africa.
For the rest of this article, click here: http://www.forbes.com/sites/roystonwild/2014/04/15/3-reasons-why-palladium-prices-should-continue-to-surge/