Analysts: palladium having worst week ever; Feb. Chinese car sales tumble
Palladium prices were soaring almost daily on strong automotive demand not so long ago, but the market is now digesting some bearish news on car sales tied to the coronavirus outbreak, analysts said. The metal fell sharply with commodities across the board Thursday as the U.S. stock market had its worst day since 1987 amid COVID-19 worries. SP Angel noted that palladium fell as much as 30% Thursday. The commodities brokerage reported that as of early Friday, the metal was on track for its biggest-ever weekly loss. “Falling car sales of up to 92% in some places has led to a sharp reduction in demand for vehicles, the market which vastly dominates palladium use,” SP Angel said in a research note. Commerzbank analysts also said there has been “more and more negative fundamental news for palladium” lately,citing a Thursday report from the China Association of Automobile Manufacturers saying that that car sales in February plummeted by 82% year-on-year to just 224,000 units. “This is the most pronounced decline ever recorded in one month,” Commerzbank said. “Coronavirus is the main reason for this, as potential car buyers stayed at home rather than risk becoming infected.” Still, Commerzbank added, “there are glimmers of hope,” as CAAM reported that around 40% of the Chinese auto industry resumed production as of Wednesday. “The CAAM believes that the bottom has already been reached and that the Chinese auto market is likely to regain its normal level in the third quarter,” Commerzbank added.