NEW YORK – Palladium surged to a record on bets that the Chinese auto industry will buoy global demand amid tight supplies of the metal used in vehicle pollution-control devices.
Spot palladium rose as much as 4.6% to an all-time high of $1 180.26 an ounce, capping a third straight gain. The commodity is up about 9% this year through Thursday, the best performance among major metals.
China’s new auto emissions standards are likely to boost demand for platinum-group metals, which include palladium, the World Platinum Investment Council said in a report Thursday. Citigroup has projected more production shortfalls, and said in a report this week that “extreme tightness” in the palladium market could help drive prices to as high as $1 300 in the second quarter of 2019.
“The combination of tightening emissions standards and continued auto-production growth means that China’s appetite for these metals has significant room to grow,” said Brendan Clifford, manager of investor development at the platinum council.
The tightness in supply has created a lucrative business of lending the metal, spurring withdrawals from exchange-traded funds. Consumers of the metal, which is used mostly to curb pollution in gasoline-fueled vehicles, have turned to the lease market for supply.
The rise in prices has attracted the attention of hedge funds. Money managers boosted their net-long position in palladium futures and options to the highest since March last week, according to US Commodity Futures Trading Commission data released Friday.
Spot palladium advanced 2.7 percent to settle at $1 157.98 on Thursday in New York.