Palladium as a Commodity: Production & Pricing | PriceVision

Palladium is one of the most precious metals that are considered commodities of high price and market shares. Palladium has gained major attention due to its unique properties with versatile applications, especially in the electronics industry.

It comes off as a very versatile metal in the commodity market and is used as a catalytic converter in the automotive industry. Palladium plays a major role in reducing the emission of harmful gasses. It is highly used in the making of jewelry due to its traits of being shiny and malleable.

Palladium is also used in other industries like the chemical industry for the dehydrogenation process. Palladium is an important metal that promises the world with greener technologies.

The commodity market values palladium since it acts as a hedge against inflation and devolution. The metal also acts as a good portfolio diversifier as it does not move in conjunction with the bond yields or the stock market.

Moreover, the demand for such metals has increased continuously due to growing industrial needs. Ultimately due to strong demands, Palladium’s commodity prices have been fluctuating.

Production of Palladium

Palladium metal is a byproduct of the mining of other materials such as nickel and platinum. It is one of the six important metals under the platinum group metals (PGMs) that look lustrous, shiny, and silvery in color. These metals are the rarest metals that are found on the earth's crust.

The whole group of PGMs consists of about 0.005 parts per million on the earth and is found as a naturally occurring mineral. Due to its versatility and yet very low production area, Palladium prices have gained much importance over the years.

The Mining of Palladium

Palladium is eradicated as a by-product of nickel and platinum. Its value in the commodity market and commodity prices mainly depend on the production level and economic viability of nickel and platinum.

Palladium prices mainly depend on the prices of nickel and platinum prices. If the demand for these metals decreases, palladium production decreases at the same time. Some of the leading producing areas of palladium include Russia, South Africa, and North America.

Source: Palladium: global production by country 2023 | Statista

Factors Influencing Palladium Mine Supply

Palladium mine supply is completely dependent on the mining and supply of its parent metals, nickel, and platinum. Although, there are several other factors that contribute to the same, such as:

● Geopolitical conditions directly influence palladium prices in the commodity market. Conditions of countries like Russia and South Africa can impact the supply of the metal.

● Since palladium is a by-product of nickel and palladium, the mining operations of these metals directly affect the production of palladium.

● Technological advancements in the process of mining can lead to better yields of palladium.

● Changes in the environmental regulations within different governments or globally can lead to higher prices of different metals, including palladium.

Visualizing Global Palladium Production

The global production of palladium consisted of about 206.5 metric tons in the year 2023. Being a crucial element with highly important physical and chemical properties, it comes in high demand within different industries.

With Russia being the largest producer of palladium in 2023 with 92 metric tons, there has been an increase in the global demand for palladium. According to surveys, the global demand for palladium is expected to reach $24 billion by the year 2030 and hence will hold importance in the commodity market.

Understanding Palladium Pricing

The global demand and supply dynamics for the production and pricing of palladium have presented a mixed scenario. There have been significant changes and shifts in the metal in the commodity market. The main factors that brought the changes to palladium prices:

1. Requirements in the Automotive Industry

The 2024 market for palladium prices in terms of the automotive industry can see a decline. Even after being the biggest industry that demands the most palladium production, there has been a decline since people started opting for battery electric vehicles or BEVs.

Even the industry started shifting from the use of palladium to platinum as autocatalysts. Due to such shifts, the demand for palladium dropped by 3% and brought changes in palladium commodity prices.

Even though palladium prices seem to decline currently, it has been speculated to increase and gain their market position back in the coming years. By 2030, palladium will have a significant place in the investment market since

2. Supply Constraints

Palladium prices are expected to be traded at about $700/oz to $1200/oz in 2024. Even after a deficit in the production levels, the prices are expected to return to normal levels by mid-2024 after being historically high for a very long time.

The market dynamics are always changing due to different issues arising in the countries of South Africa and Russia since they are the biggest producers of the metal.

3. Recycling of the Metal

Palladium being one of the rarest occurring natural metals, people have started getting conscious about the depletion of such natural resources. Ultimately, various methods have been laid out for the recycling of precious metals like palladium in the coming times.

Automotive industries using high amounts of palladium are seeking methods to scrape them off through the rejected automobiles and to recycle them for further uses. The implementations of such techniques are expected by the year 2027.

With palladium being recycled, it is forecasted that the metal might again rise in price since the production might come on par with its demand in the industry.

4. Geopolitics and Economy

The major palladium-producing countries have the capability to impact the demand and supply chain of this metal. Any shifts in the political or economic state of the country can bring disruptions to the supply and changes in the market.

With the current tension in Russia amidst the political issues, the production supplies have also been facing limitations and hence made the price rise during certain times this year.

It has also been speculated that due to the shifts in the demands of the metal, miners might face such situations as generating a profit might be a bit difficult this year.

Influences on Palladium Demand

Palladium being an important metal in the commodity market has many uses to it. Influences within the demand and supply from different markets play a major role in deciding commodity prices of palladium.

The metal is majorly used as a catalytic converter in the automotive industry for reducing emissions. Strict laws against emissions in the USA, China, and Europe have brought up the demands of palladium.

Moreover, the metal is very lustrous and has anti-tarnish properties due to which it is considered a very valuable metal for making jewelry. It is used as an alloy while making white gold which is very popular in the jewelry industry.

Palladium has very diverse technological usages. It is used in the making of multi-layer ceramic capacitors for plating electronic components. The metal is also taken into use in the dental industry and chemical industry as a catalyst.

Historical Price Trends of Palladium

Palladium being an important metal in the commodity market has shown a volatile nature. Starting with a significant high in the year 2000, the metal took dips in prices continuously for the next four years until 2004.

The metal managed to gain back the tracks in market prices during the year 2005 but was hit with a sudden yet significant low during the financial crisis of 2008.

However, the years 2019 and 2020 saw groundbreaking highs since there were stringent emission regulations placed in different countries globally. From 2021 the metal has been facing dips in its prices since the demands have gone down due to the rise of EVs. Nonetheless it is speculated to gain back the highs due to increasing demands in other industries.

Palladium as a commodity is aimed to reach highs again shortly and gain its place back as a significant metal by 2030.

Source: https://www.macrotrends.net/2542/palladium-prices-historical-chart-data

Opting for Palladium as an Investment

Due to its extensive use in different industries, palladium poses itself as an important element of the commodity market. Investors keeping their minds on the commodity prices can look up to palladium as an investment opportunity.

The metal can provide investors with high returns due to its limited supply yet very high demand. During the period of high inflation, when the value of flat currency decreases, the value of tangible assets like palladium tends to soar high. It is one of the safest investments for people looking to diversify their portfolios.

Even though palladium is one of the safest investment options, there are still some risks involved with it. Some of the factors to keep in mind while investing:

● Market Volatility: Palladium prices are very volatile in nature. Being dependent completely on the demand and supply chain of different industries, a sudden swing can be seen in its prices that might not be expected.

● Geopolitical Influences: The major producing countries of palladium are Russia and South Africa. Changes in the political or economic conditions of these countries can directly impact the prices of palladium. Such conditions disrupt mining activities that have a potential impact on the commodity market due to disruptions in the demand and supply chain.

● Constricted Liquidity: The metal palladium has a very small and niche-based industry. These conditions result in lower liquidity rates that make it difficult for investors to enter or exit at different palladium price points.

● Investment Costing: Palladium being a very precious metal requires secure storing and insuring. These aspects can add up to the costs of an investor leading to burning out of overall returns.

Investors looking to invest in the commodity market through palladium should seek out professional technological support from companies like PriceVision.

Investing in Palladium

Palladium is an important aspect of the commodity market. People looking to engage with palladium can opt for physical holdings or through different financial instruments. Each of the methods offers different levels of exposure to palladium in terms of commodity prices and volatility.

Physical commodities of palladium such as palladium bars and coins allow direct ownership of this metal to the investors. Investors wanting to invest through tangible assets can choose this option. However, one would have to provide extra costs for secure and insured storage of palladium in such cases. The liquidity of the metal remains low here.

Investors looking to opt to invest in palladium without physical storage can opt for Palladium ETFs. These provide liquidity similar to the ones like stocks providing investors with enough liquidity. This method provides flexibility with ease of trading shares.

Stocks of Palladium Mining Companies

Another method to diversify your portfolio with palladium is through equity investments that allow investors to gain exposure through the metal’s economic aspects. One does not have to invest in the physical commodity market in this case.

The stock performance of palladium is influenced by a company’s operations and efficiency along with palladium prices in the market. This method adds a layer of diversification since the palladium prices in the commodity market are influenced by two different aspects.

Conclusion

Palladium being an important commodity of the market has been seen through different times and brought changes to its price. With the year 2024 looking for a stable market for palladium, several factors still have the capability to bring sudden changes.

FAQs

Q1. Why is palladium important in the commodity market?

Palladium is a rare metal that comes from the group of platinum group metals that are in huge demand in different industries, especially the automotive industry as a catalyst.

Q2. What are the main areas that support palladium production?

The leading producers of palladium are Russia and South Africa. The metal is mainly mined through the earth's crust as a by-product of platinum and nickel mining.

Q3. Can a country’s internal aspects influence the price of palladium?

Every nation has a set of rules for the products they make throughout the area to safeguard the interests of their people. Different aspects like trade relations, and import or export prices with fluctuations in the internal economy bring changes to the prices of such commodities at the global level.