Palladium barrels towards $2,000 as SA power cuts add to supply concerns

Singapore — Palladium’s blistering rally shows no sign yet of cooling off as records tumble: the precious metal advanced to the highest ever on Friday as it climbed for an unprecedented 16th day. Sister metal platinum fell.

Prices are now barrelling towards $2,000/oz as mining disruptions in SA, a major producer of the precious metal, add to supply concerns, tightening a market already hobbled by a persistent deficit.

Palladium is headed for a seventh quarterly climb as demand for the metal used in autocatalysts has been strengthened by tighter emissions rules, with Citigroup forecasting it could hit $2,500 an ounce in 2020.

In SA, rolling blackouts have hurt miners’ operations after state utility Eskom announced record power cuts. Spot palladium climbed as much as 1.3% to $1,965.82/oz, while platinum headed south, dropping as much as 1.8%.

Morgan Stanley said in an outlook that it sees a large deficit for the former, and continued surplus in the latter.

There is  a good chance that palladium will touch $2,020 before 2020, said Jonathan Butler, precious metals strategist at Mitsubishi Corporation UK said. “SA electricity supply concerns have helped palladium, together with still strong physical demand,” he said.

Commerzbank analyst Daniel Briesemann said while it seems that “nothing can slow palladium” and “even though we regard the steep price rise as exaggerated, there is no end in sight to the rally”.

Bloomberg