Read the latest intel on Palladium from the World Platinum Investment Council. The spectacular increase in the price of palladium since 2016, in particular during 2019, has attracted widespread interest from investors, industrial users of palladium and market commentators. It also highlighted the importance of understanding the palladium market when considering an investment in palladium or platinum.
Additional Sprott Palladium Resources
What is palladium used for?
Palladium’s physical and catalytic properties result in it having a wide range of uses in industrial and consumer applications, and for investment. The dominant use of palladium today is in catalytic converters used to control emissions from gasoline and diesel internal combustion engines in passenger and light-duty commercial vehicles. In 2019, 84%, or 9,677 koz, of palladium was used in automotive emissions control. Palladium is also used in jewelry, dentistry, watchmaking, blood sugar test strips, spark plugs, surgical instruments, hydrogen storage, and electrical contacts. In total, these non-automotive uses represent a very small proportion of palladiums total annual consumption.
In comparison, platinum has a more balanced end-use exposure, and in 2019 the split in the 4 main segments of demand were: automotive 36%, jewelry 26%, industrial 23% and investment demand 15%. Platinum’s wider and more diverse end-uses protects its demand against sudden or unexpected changes in automotive demand far more than is the case for palladium.
The four main demand segments of palladium are shown below with 5-year ranges (2015 to 2019) shown. Negative investment demand is due to net sales from physically backed Exchange Traded Funds (ETFs) over the period.
Figure 1. How Palladium is Used
Source: Johnson Mathey, WPIC Research.
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Precious metals investments are more volatile on a daily basis and have higher headline risk than other sectors as they tend to be more sensitive to economic data, political and regulatory events as well as underlying commodity prices. Precious metals investments have price fluctuations based on short-term dynamics partly driven by demand/supply and also by investment flows. Precious metals investments tend to react more sensitively to global events and economic data than other sectors.
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