Industry view | palladium: in 2023, facing the challenge

Issuing time:2023-03-02 15:21

Article source: admiralmarkets | translation: the world association of platinum investment


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Palladium may not be as popular as gold or silver. But palladium is still an important precious metal that is used in the manufacture of many of the products we use in everyday life. Palladium's extensive use and limited supply have attracted investors' attention.


This article will share some information with you to increase your knowledge of palladium.


The fundamentals of palladium

Palladium (Pd) was discovered in 1802 by British chemist William Hyde Wollaston, who discovered the metal while trying to analyze samples of platinum ore obtained from South America. Wollaston named the metal after Pallas, an asteroid 2 discovered two months earlier (March 1802).
Palladium is a silver-white metal belonging to the Platinum Group metals (PGMs). It is malleable and easy to work with. Palladium is used in catalytic converters for cars and helps convert carbon monoxide into water and carbon dioxide. The metal is also used in jewelry, electrical contacts and more.
The world's largest palladium deposits are in Russia, South Africa, Zimbabwe and the US state of Montana. Nornickel, a company based in Russia, produces most of the world's palladium. More than 50% of palladium mined globally each year is used in catalytic converters.

Palladium trading: Price volatility

At the end of July 2022, palladium hit $2,021 an ounce, nearly $300 more expensive than gold at the time. The metal's price soared in 2022, forcing some automakers to replace palladium with cheaper platinum.

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Illustration: Admirals MetaTrader 5 captures the monthly table of palladium (100 oz) against the dollar as of February 23, 2023. The illustrated date range is 1 February 2018 to 23 February 2023. Past performance is not an indicator of future results.

The past three months have not been good for palladium. In December 2022, palladium fell 3 percent, and in January this year it was worse, falling even more (9 percent).

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Illustration: Admirals MetaTrader 5 captures the monthly table of palladium (100 oz) against the dollar as of February 23, 2023. The illustrated date range is 25 October 2022-23 February 2023. Past performance is not an indicator of future results.

February could be the third straight month of declines for palladium, which has fallen nearly 8 percent through Feb. 23. Notably, palladium hit $1468.94 on February 14, its lowest level since August 2019.

Nornickel forecasts a decline in palladium production in 2023

On February 10, Nornickel announced that it expected its palladium production to decline in 2023 due to planned maintenance at its Nadezhda smelter. A Reuters report said the company's palladium production could fall 8 percent to 14 percent from 2022 levels, or between 2.407 million and 2.562 million ounces. Nuo Nickel's palladium production grew 7 percent in 2022 from a year earlier.
Commenting on the 2022 production figures, analysts at Nornickel noted that "we exceeded our production expectations for all key metals: copper and platinum were in line with production guidance, while nickel and palladium were ahead". "We expect the palladium supply and demand balance to narrow to a deficit of 300,000 ounces this year," the firm said in a revised report released on February 10.

Electric cars have weighed on palladium demand

Economists at Commerzbank believe demand for palladium is likely to fall because "palladium is increasingly being replaced by platinum and the number of electric vehicles is also growing, so less palladium is likely to be needed to produce new cars."

"Palladium prices are likely to fall this year, according to analysts, with the average forecast price for 2023 at $1,809.8, a 14.3 percent decline from the actual 2022 average price, which is not to be taken lightly," the London Precious Metals Institute's 2023 Precious Metals Survey said.

Palladium Trading and Risk Management

You may wonder if there is value in trading palladium, or if it is risky. Trading financial instruments involves certain risks; Trading palladium is no exception. Rapid changes in the market that contradict your predictions, or an inaccurate assessment of the market, can result in the loss of your hard-earned money. The loss of funds could jeopardize your financial plan.
How can you be sure that trading palladium or any other instrument won't jeopardize your investment purpose? The answer may be a combination of investor education and the use of risk management tools at your disposal. Watching webinars hosted by trading experts or reading detailed articles related to trading techniques or even tips on how to build your investment strategy can help you become the trader you want to be. Filtering information is essential.
Brokers support traders by providing risk management tools to help them reduce losses in a downturn. For example, stop-loss orders or maximum retractions can help you improve your personal risk management, and the strategies you plan can make it easier for you to achieve your financial goals. Trading palladium or any other instrument requires not only knowledge and inspiration, but also thorough preparation. (Credit: admiralmarkets)


World Platinum Investment Association



Note: The information provided here is for informational purposes only and does not represent the views of the World Platinum Investment Council and does not constitute or should be construed as the investment advice of the World Platinum Investment Council.


Note: This press release is selected from real-time industry news from foreign industry news websites and translated and edited into Chinese by the World Platinum Investment Association for your reference. In order to respect intellectual property rights, if any media want to reprint, please be sure to indicate the original source of the article and the source of the translation.
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