Palladium Price Outlook – September 2023

“Palladium prices have spent much of their time since the middle of June trapped in a tight range between $1,200 and $1,320. Prices have come within striking distance of the lower bound of this range on several occasions, having broken below this level on a few occasions as well.

The palladium market is faced with several headwinds on a fundamental basis. There are several factors on both the demand as well as supply side that do not bode particularly well for the metal’s price rising. Some of these factors include the following:

(a) The increased use of platinum in gasoline autocatalysts at the cost of reduced use of palladium in these catalysts.

(b) The growing market share of BEVs. This is particularly bad for palladium because of palladium’s large exposure to the passenger vehicle market, which is where BEVs are gaining market share. BEVs are bad for platinum group metals because they do not need auto catalyst.

(c) Palladium is also seeing an increase on the scrap supply side, which is further weighing on prices

There is some possible support from reduced palladium mine supply out of Russia and the risk of lost output due to power outages in South Africa, but these price supportive factors are to a large extent being overshadowed by the weakness in fabrication demand and increases in scrap supply.

While the fundamentals of palladium are not too compelling at this time, positive sentiment in the other precious metals could provide some support to the metal’s price. Furthermore, a lot of the bad news in the palladium market already is factored into prices, which could slow the pace of any future declines. CPM sees prices consolidating around current levels over the next few quarters.

If palladium prices break forcefully below the $1,200 level, it would not be surprising to see prices slide toward $1,085. On the upside prices have strong resistance around the $1,320 level and it would require some supply disruption for prices to break above this level.”