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Palladium price could nudge higher, but market will remain in surplus
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13th November 2007
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Palladium demand would return to growth in 2007, rising by 135 000 oz, but the market would remain in surplus, Johnson Matthey said in its 'Platinum 2007' interim review.

Johnson Matthey marketing and publications GM Jeremy Coombes forecast that the price for palladium in the next six months would stay between $320/oz and $420/oz.

"Fund buying could raise the price to $420/oz over the period, particularly if platinum and gold prices rise," he said.

He added that fund and investor interest would continue to determine the price, as some investors feel that the metal was currently undervalued, and these investors would not let the price fall below $320/oz in the next six months.

The growth in demand was largely attributed to the rising purchases of palladium by the automotive sector for use in the production of autocatalysts, which serve to lower carbon-dioxide emissions from vehicles.

In light duty diesel autocatalysts, the use of palladium was forecast to increase over 200 000 oz in 2007, more than double the figure for 2006.

The use of palladium instead of platinum in the gasoline sector continues to grow, and about three times as much palladium as platinum is now used in gasoline cars.

However, Coombes indicated that the replacement of platinum by palladium in the gasoline sector was reaching its limit, although there was room for growth in the diesel sector.

With regard to other platinum-group metals, Johnson Matthey stated that demand for ruthenium was expected to rise by 4,1% to a new peak of 1,34 million ounces in 2007.

This was largely owing to increased purchases for new technology developments by the electronics industry.

Demand for rhodium would likely fall by 3,9% in 2007, as the weight of the metal used in the autocatalyst sector would decline for the first time since 2002. Supplies could also decrease, with lower shipments from Russia, and the rhodium market would be likely to be close to a balance, with a deficit of only 4 000 oz.

Edited by: Mariaan Webb


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