The price of palladium is sitting at around USD
$849 per ounce
. This metal hasn't reached such high levels since February
One reason for this spike in price is that demand is
currently outpacing supply. Russia was once one of the world's
largest producers of the metal. However, it has sold off the
majority of its reserves, according to Brahm Spilfogel, a
vice-president and portfolio manager at RBC Asset Management, as
. Russia used to stock pile palladium in order to maintain a
stable market price.
Palladium mines are deep and expensive to run. This only adds
to the low-supply situation, as a lot of companies that mine this
metal have a difficult time generating positive cash flow.
"Strong industrial demand for palladium coupled with very
limited mine supply growth has attracted a considerable amount of
investment interest in the metal," said Credit Agricole analyst
Robin Bhar, as reported by
Although investing in metals is always risky business,
analysts are pinning palladium and
as safer bets over the long run.
Palladium prices are largely driven by industrial
Along with platinum, palladium is used to manufacture
catalytic converters for automobiles. Catalytic converters reduce
the toxicity of automobile emissions. Since the auto market has
begun to rebound from the recession, more palladium will be
needed for vehicle production. It is expected that growing
demands coupled with low supplies will continue driving the price
The National Statistics Institute
reported a 24 percent increase in the automobile industry orders
in the last quarter of 2010 as compared to 2009. This growth
seems to be continuing on into 2011.
Japanese auto sales went up around five percent between
December of 2010 and January of this year. American auto
sales have also increased, climbing 16 percent since this time
last year. In addition, there has been an increase in sales of
pick-ups and cross-over vehicles. These types of vehicles use
more platinum and palladium metals in production.
By 2009, total vehicle sales in China reached 13.6M units, as
compared to the US with 10.6M units. China has become a huge
competitor both domestically and internationally in the
automotive sector. In fact, last year China experienced a
year-on-year 93.3 percent increase in foreign car imports,
according to the
China Association of Automobile Manufacturers
The European auto market also seems to be gaining a stronger
foothold. Although automobile sales tend to be weak in Europe,
nations within the EU are some of the largest consumers of
palladium for use in catalytic converters. Recovery to
pre-recession levels is expected to be achieved by 2015,
European Automobile Manufacturers'
Car registration in France surged 8.2 percent this January as
compared to the same month in 2010. Automakers are racing to meet
this rise in demand.
Palladium may also be in demand from the healthcare industry
in the coming years. Using nano-particles of this metal, chemists
have developed a method of synthesizing drugs inside the human
body at the precise location where they are needed. This could
help to curb the side affects felt on the rest of a patient's
body resulting from procedures like chemotherapy.
Researchers have devised a way to exploit palladium as a
catalyst. This method has never before been used in biochemical
systems. The procedure involves new chemistry that has never been
done inside a cell.
"Normally when you synthesize drugs, you do that in a
chemistry lab at really high temperatures of around 130°C and
then you give it to the patient. We managed to do it at 37°C
inside the cell," said Emma Johansson of
, as reported by
. Johansson worked on the project.
While normal chemotherapy drugs circulate in the bloodstream
and attack cancerous cells, they also attack normal, healthy
cells. This causes a number of negative side effects within the
Palladium: Supply and Demand
originally posted on