Palladium boom for Zimplats, Mimosa
Spot palladium surged to a record high on bets that rebounding economies will fuel auto-maker demand, deepening supply shortfalls of the precious metal.
Palladium is one of the platinum group of minerals (PGMs) mined at local mine houses Zimplats, Mimosa and Unki.
Several mine houses such as Great Dyke Investments and Karo Resources, which can also produce the same mineral are under various stages of development.
Last year the bulk Zimbabwe’s export earnings were from PGM related minerals including palladium.
Palladium, used in catalytic converters to curb emissions in gasoline-powered vehicles, rose as much as 4,8 percent to $2 895,96 an ounce on Wednesday, surpassing the previous record set in February 2020.
Prices have climbed more than 17 percent this year, building on five straight annual gains.
The palladium market has been in a production deficit for several years, and tighter pollution standards in Europe and China are spurring demand for the metal from automakers. Disruptions at Russian mines run by MMC Norilsk Nickel PJSC, the world’s largest producer, have added to supply concerns.
“It’s a confluence of factors that’s driving palladium,” said Tai Wong, head of metals derivatives at BMO Capital Markets.
“Fundamentally, there’s going to be a material deficit this year and automakers need to restock.”
Palladium, on its way to a third straight monthly gain, has also benefited from the outlook for low interest rates and quickening global growth.
Federal Reserve Chairman Jerome Powell reiterated his dovish stance on US monetary policy last week, and US and Chinese economic reports recently have buoyed optimism.
“There is nothing but tailwinds behind palladium at the moment,” said Jay Tatum, portfolio manager at Valent Asset Management.
“With a global economic recovery on the way and the anticipated increase auto production speaking in favour of palladium, what are the chances that it is lower in three to four months?”
Analysts expect automakers that slowed production amid a global semiconductor shortage to restock supplies in the second half of this year and next year, adding to the bullish view.
The “‘catch up’ when chip supply recovers and auto stocks are rebuilt will be significant,” Citigroup Inc. analysts including Oliver Nugent said in a note.
“This will be bullish for palladium physical balances especially.” It is likely that speculative buying prices this recovery ahead of time, they said.
Nornickel increased production of platinum and palladium in the first quarter even as two of its biggest Arctic mines fought flooding that forced the Russian mining company to lower annual targets.
Spot palladium rose 4,3 percent to $2 879,86 an ounce at 2:14 p.m. in New York. Futures for June delivery on the Nymex gained 4,3percent to settle at $2 875,60 an ounce.
Other precious metals also advanced. Gold climbed as much as 1,1 percent, touching a seven-week high and is trading at $1 79235 an ounce, while silver rose for a second straight day.
Platinum also gained. – Bloomberg/Business Writer.
