Palladium, which has been hoping to perform better in the coming months with auto sales zooming in several countries, witnessed a turbulent month in July.
At the start of July, the price of the platinum group metal had fallen from the $470 mark in late June down to $430 an ounce. Since then, the metal has regained its losses and closed on July 28 at $468 an ounce. The drop in price was mainly due to concerns of inflation and the possibility of a double-dip recession.
The concerns over the return of the recession, and the lackluster performance of palladium were based on weak car sales worldwide after promising numbers from the first two quarters, especially in Asia. Palladium's main industrial use is in the manufacturing of catalytic converters.
Lingering debt concerns in the western world are still a factor; however, after European banks passed their 'stress tests', the markets surged.
Auto sales worldwide have been less then stellar after promising numbers from the first few months in China and India. A downturn in the auto industry indicates that consumption of platinum and palladium will continue to drop. Automobile sales in the US have decreased 10.8% from around 1.1 million units in May 2010, to almost 982,000 in June.
The outlook for car sales was the same in China, as auto production is down 6.9 percent from the first quarter. In India, car sales dropped 5 per cent. Despite the downturn in auto sales, many analysts see a rebound in platinum group metals by the fourth quarter as sales in the Asian continent are expected to rebound. The move to palladium based catalytic converts from the standard platinum converters bodes well for the palladium market as well.