Palladium Price Outlook

“Palladium prices sank to multi-year lows during the first week of March, before recovering slightly following sharp gains in the other exchange traded precious metals. Palladium prices continue to face serious headwinds from the demand side, with ongoing substitution of palladium with platinum in gasoline auto catalysts, general softness in passenger vehicle demand, and an ongoing increase in market share of electric vehicles all simultaneously weighing on palladium fabrication demand.

The supply side of the palladium market is somewhat more supportive of palladium prices, with concerns about disruptions to refined palladium mine supply from South Africa due to electricity shortages, and the loss in output at Sibanye’s Stillwater West mine providing some downside support to palladium prices. An incident at Sibanye’s Stillwater West mine in the middle of March has resulted in operations being suspended for a four-week period. The mining company estimates a loss between 25,000 ounces to 30,000 ounces in lost 2E (platinum and palladium) output due to the mine’s suspension. This would be a roughly 19,500 ounce to 23,400 ounce loss in palladium mine supply. While any loss in supply is supportive of prices, this is a minuscule loss with global palladium mine supply standing at between 6.5 to 7.0 million ounces.

Furthermore, the demand side of the equation is very weak at this time and likely to remain so in coming quarters, which would offset any small decline in mine production and should continue to exert downward pressure on palladium prices. While prices seem to have found some support around $1,400 at this time, a decline toward $1,300 or even lower cannot be ruled out.”