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Could palladium prices retrace all-time highs? Autocatalysts driving PGM demand

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(Kitco News) - With the economy showing signs of normalizing around the world, demand for cars, the dominant industry behind demand for platinum group metals (platinum, palladium, and rhodium), could see a v-shaped recovery said Jonathan Butler, head of business development at Mitsubishi Corp.

“In places like China, many people are still coming to the market for the first time. Generally speaking, we are seeing something of a v-shaped recovery in auto demand in China, and it remains to be seen whether we will see that in other parts of the world as well,” Butler told Kitco News.

While palladium has seen a 50% increase in prices in 2019, many of the macroeconomic drivers that pushed prices up last year have been eliminated by the outbreak of COVID-19 this year.

“The story of [2019] was very much a story of rising demand. The auto industry is critical to these metals and the beginning of this year, prior to COVID-19, saw new highs in automotive demand. Car sales around the world, especially in places like China, were still rising strongly, and of course in places where air quality legislation is tightening, that was driving greater loadings of these catalysts on vehicles,” he said. “Where it all changed is with COVID-19, with the national lockdowns that we saw.”

Long-term, the rapid adoption of electric vehicles, which do not require catalytic converters and accompanying metals, could pose a threat to the PGM market, he said.

Another tailwind would be cost-savings initiated by the auto industry, where a process known as thrifting could see a reduction in precious metals usage, he noted.

Butler’s discussion on the biggest drivers of PGM prices will be continued on June 4, at 10:00 am EST during the live IPMI webinar, “Auto Catalyst Value Chain: COVID-19 and Beyond,” in partnership with Kitco Media.

Viewers can access the live webinar at the links below:

IPMI website: https://www.ipmi.org/page/webinars-autocatalyst

YouTube: https://youtu.be/ZyPXPe228SQ

The International Precious Metals Institute is the preeminent association for engaging and connecting precious metal professionals and their organizations to the widely diverse global precious metals supply chain. To find out more, visit the IPMI website www.ipmi.org

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.