Tighter emission standards to hike Palladium

China to demand

3429 mn oz Palladium by 2022

According to Michael Jones, president and CEO of Platinum Group Metals (PGM), Palladium prices have fallen sharply from last month’s record highs, but the metal’s long-term potential will continue to drive prices higher for years, amid an economic downturn. He said in a release that his company continues to move forward with the development of its South African Waterberg PGM project as he sees further growth potential for palladium.

Jone's comments come as palladium prices have fallen nearly 13% from March's historic highs. June palladium futures last traded at $1,376.30 an ounce. In particular, Jones said that demand for palladium will remain strong even if auto sales in the U.S. and China continue to slow. He explained that automakers have to add more of the precious metal to catalytic converters to meet tighter emission standards.

“Even if global auto sales cool, [amount of palladium] per car is going up dramatically and that is the point everyone is missing,” he said. According to research from BASF, the world’s leading supplier of catalysts, demand for palladium in China is expected to grow from 2.332 million ounces to 3.429 million ounces by 2022.

But it’s not just the demand side that will continue to support prices through the next few years. Jones added that the demonization of diesel engines, particularly in Europe is reducing demand for platinum, is prompting some miners to reduce their production to cut costs in a weak price environment. However, palladium is mined as a by product in mostly nickel and platinum mines.

“You have platinum producers cut production and that is tightening the palladium market regardless of what the price of the metal does,” he said.