Palladium hit a new all-time high on Friday due to ongoing concerns about supply from South Africa and the prospect of a revival in demand in China.
Nymex palladium futures rose 1,5% in morning trading in New York to $ 1.636,60 before easing again. Palladium's annual profits for 2019 are over 40%, or $ 477 an ounce.
The threat of industrial action in South Africa, which together with Russia accounts for more than 80% of global platinum metal production, threatened again on Friday after the militant Amcu union re-elected its fire service leader.
Amcu came to the fore in 2012 when clashes between the police and striking workers at the Marikana mine in the productive platinum belt of the African country left 34 dead.
More than three quarters of the palladium ends up in catalytic converters for gasoline engines, and the increase in precious metals can be seen despite a sharp decline in vehicle sales worldwide.
Top consumer China has seen a total of 15 declines in sales in the past 14 months, and 9,9% fewer cars and trucks rolled off sales floors in August compared to last year. Even in the world's No. 2 market - the USA - annual sales are expected to be below those of 2018.
What the palladium has raised is higher average populations per vehicle as more stringent emissions standards have been introduced in China and Europe. BMO Capital Markets said in a recent announcement that "any signs of a revival in the Chinese auto market could lead to additional upside in prices."
Robust rhodium
The sister metal rhodium is also on the rise and has more than doubled over the course of the year so far. Rhodium, which is also mainly used in automotive catalysts, changed hands in New York on Friday at $ 5.400 an ounce, the highest price in 11 years.
Due to the rarity, the small size of the demand and the concentrated supply, the prices are usually volatile.
Rhodium (and its sister metal ruthenium) are noticeable when prices fluctuate - rhodium reached $ 2008 an ounce shortly before the financial crisis in 10.025, but had to give up 90% by the end of the turbulent year.
The platinum price was $ 945,10 on Friday after briefly hitting $ 1.000 an ounce two weeks ago. Given the historically weak price, some investors are taking the opportunity to stock up on the metal.
The holdings of exchange-traded platinum funds have grown rapidly this year, reaching 3,3 million ounces in the past week, an increase of 38% or 916.000 ounces in 2019.
The vaults of the palladium ETFs have emptied, however, as investors freeze some of the profits. Palladium-backed ETFs total 655.000 ounces, a decrease of 120.000 ounces so far this year.
ISE- January 2020
