LONDON – A deficit in the palladium market that has driven prices of the autocatalyst metal to record highs will widen dramatically this year, specialist materials company Johnson Matthey said in a report on Wednesday.
The company, a leading autocatalyst manufacturer, said the shortfall in the roughly ten-million-ounce-a-year palladium market narrowed in 2018 to 29 000 ounces from 787 000 ounces in 2017, its widest in three years.
But it said stricter emissions standards would increase demand for palladium to put in catalytic converters, and supply would struggle to keep up.
"The rate of growth in secondary supplies is likely to be lower than in 2018, while primary shipments are expected to be flat," the report said.
Palladium-backed exchange-traded funds would no longer be able to bridge the gap between supply and demand by returning metal to the market after their holdings fell to 730 000 ounces by the end of last year, it added.
For platinum, Johnson Matthey said the roughly 8-million-ounce-a-year market was oversupplied by 498 000 ounces last year, up from 176 000 ounces in 2017, and another surplus was expected this year.
Palladium prices have surged around 70 percent in the last six months to record highs above $1 400 an ounce, while platinum, once the most expensive of the major precious metals, is stuck near ten-year lows around $800 an ounce.