Shortages could drive palladium prices up in 2011

on Thursday, March 3, 2011

Shortages could drive palladium prices up in 2011According to a recently published report, the price of palladium could jump in 2011 because of supply shortages of the precious metal. 

According to Switzerland customs data, the amount of imports of palladium from Russia, the world's biggest exporter, fell 12 percent in 2010. Switzerland is an important indicator of supply levels because it serves as the European hub for the precious metals trade. Nonetheless, fewer shipments of the metal could cause supply chain disruptions, especially in the newly resurgent automobile industry.

Global automobile sales jumped in 2010 and have started off strong in 2011; in February, GM recently reported a 46 percent sales increase from the year prior. The increased demand for cars, however, is putting pressure on palladium miners because the precious metal is a critical component in automobile manufacturing.

The most accurate price forecasters of palladium, according to Bloomberg, predict that the median palladium price will climb as high as $940 per troy ounce in 2011. On Wednesday, palladium futures traded at $821 per troy ounce in New York.

David Davis, a mining investment analyst at SBG Securities, a subsidiary of Standard Bank, told Bloomberg the "palladium market, excluding any Russian stockpiles coming in, is going into an ever-increasing deficit." Ultimately, that's going to "put upward pressure on the price," he affirmed.

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