Palladium soars to $1,900/oz after SA mine halt operations

London — Palladium neared a record $1,900/oz and platinum jumped after SA mining companies halted operations in response to the country’s power cuts.

SA, the world’s biggest producer of platinum and number two palladium supplier, is facing a sixth day of load-shedding. Eskom is struggling with breakdowns at plants and heavy rains that have soaked coal used as fuel.

“Tight supply that potentially could get even tighter due to production problems in SA helps provide the underlying support,” said Ole Hansen, head of commodity strategy at Saxo Bank.

Palladium may “pause at $1,900 given some technical resistance, but overall the price could go higher,” he said.

Spot platinum jumped as much as 1.6% to $909.92/oz, the most since November 26. Palladium added 0.7% to $1,895.64/oz. Prices have climbed for 13 straight days, the longest stretch since 2014.

In other metals, gold and silver both gained for a second day, adding 0.3%.

Palladium’s records

Palladium has smashed through new records over the past two years because of limited supply and higher demand for the metal, which is used in filters for petrol and hybrid vehicles. The car industry has boosted purchases to meet stricter emissions rules, sending prices up 50% in 2019.

Car makers are not that price sensitive given how little palladium contributes to their total costs, said Hansen.

Citigroup sees palladium prices jumping to $2,500/oz by mid-2020 because of a persistent supply deficit. There are no signs of substitution with cheaper platinum or significant amounts of scrap metal coming to market, the bank said.

Analysts have been less bullish on the outlook for platinum, given weaker demand for the metal, mainly used in autocatalysts for less popular diesel vehicles. Prices are up 13% in 2019, helped by investment buying.

Longer term, platinum may benefit from Asia’s push for fuel-cell electric vehicles, which use platinum catalysts in the electrodes, according to a report this week from precious metals refiner Heraeus.

Bloomberg