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Palladium: The Precious Metal Nobody Knows:
Palladium may rise 21% in 2006 as Chinese jewelery demand gains and carmakers use more in catalytic converters to replace platinum, said Beijing Antaike Information Development Co, an adviser to the Chinese government.
Palladium may average $230 an ounce next year, from $190 in 2005, Jin Xiangyun, an analyst at Antaike, said in an interview from Beijing on Nov. 9. The metal has averaged $192.80 an ounce this year and traded at $239 at 6:55 am in London, the highest intraday price since June 2004.
Platinum is trading at four times the price of palladium, fueling speculation demand may soar for the cheaper metal for catalytic converters used to cut tailpipe emissions. Demand for jewellery containing palladium may rise 43% in 2005, fuelled by Chinese consumption, according to consultancy GFMS Ltd.
“The huge potential for Chinese use of palladium in jewelery will give a strong boost to market confidence and we’ll see more hedge fund interest in the metal” said Jin, who has followed the palladium market since 2001 and who correctly forecast the platinum price in 2004.
Antaike is a research affiliate of the China Nonferrous Metals Industry Association. It advises the Chinese government on industry policy. Russia’s OAO GMKN Norilsk Nickel is the world’s biggest producer of palladium, used by jewelers in so-called white gold. About 60% of the precious metal is used to make catalytic converters, while some is also contained in electronics.
Jewelery containing palladium was first sold in China in late 2003 and imports of the precious metal may exceed platinum for the first time this year, said Jin.
Palladium prices may more than double by 2008, she said. The metal reached a record $1,125 an ounce in January 2001, more than four times current levels, amid a shortage of supplies from Russia.
Antaike’s forecast for an increase in prices contrasts with expectations for a decline by Barclays Capital. The company, the securities unit of Barclays Plc, estimates palladium will average $180 in 2006, from $189 in 2005.
Citigroup this month raised its forecast for palladium in 2006 to $265 an ounce. Umicore SA, the world’s third-largest maker of catalytic converters, last year said it developed a way to replace as much as one-quarter of the platinum in the devices in diesel cars with palladium.
Incidenally, Platinum closed this week with a surge to $970.00 and analysts expect Platinum to hit $1000 soon.
