Palladium demand to remain strong over next few years

(Excerpt)

The demand for palladium is expected to remain strong in the near-term due to introduction of tougher vehicle emission norms and a marked shift in consumer preference from diesel to petrol (gasoline) engines―the auto industry consumes more than half of all palladium supply globally. Palladium is a key part of gasoline catalyst systems. Though the demand for petrol vehicles is expected to strengthen further, IHS Markit expects palladium prices to fall slightly or stabilize in the short-term driven by the weakness in light vehicle (LV) globally. Prices of palladium reached its record high in late March, touching USD1,604 per troy ounce, but has weakened ever since to around USD1,360 (as on 31 May). According to KC Chang, senior economist at IHS Markit Pricing and Purchasing Service, the current palladium price reflects long-term demand expectations running well ahead of actual physical demand. Thus, IHS suggests buying only on an as-needed basis, waiting until prices move lower in second half of 2019.

According to Johnson Matthey's "PGM Market Report" published in May 2019, palladium demand from automotive recorded a new high of 8.72 million ounces, up 2% year-on-year (y/y), in 2018, even though there was a slight decline in global light duty gasoline vehicle production. The company expects palladium demand to strengthen further this year due to rising loadings on European gasoline catalyst systems.

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