Palladium prices poised for an increase
By Tom Stundza -- Purchasing, 5/23/2007 2:19:00 PM
Palladium supplies are dwindling while demand is surging, creating a situation where spot prices have been averaging $367/ounce over the past two months and some forecasts as high as $420.
Sales will rise 6.5% in 2007, forecasts precious metals consultant CPM Group, because of continued growth of use in car-exhaust systems and jewelry. According to Johnson Matthey, palladium use in catalytic converters rose 3.9% in 2006 to 4.02 million ounces. And, with platinum averaging $1,312/ounce so far this month, palladium still is the cheaper alternative, according to a Bloomberg News Service report.
Some analysts, such as Michael Gambardella at J.P. Morgan Securities in New York, see expanded use ahead for palladium in other applications as well, especially if the metal’s price average stays around his forecast of $386 for this year. Gambardella writes that “with demand for platinum so tight and the creation of exchange-traded funds, or EFTS, threatening to create a price spike, expect a bigger move by end users to the more cost-effective palladium.”
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