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Clean-car push puts palladium in the fast lane
By: Henry Sanderson and Neil Hume
- For more than a year the silvery-white metal has been more precious than gold Palladium is used in the production of hybrid cars such as Toyota’s Prius, and high prices for the precious metal have led to a rise in the theft of catalytic converters Palladium is used in the production of hybrid cars such as Toyota’s Prius, and high prices for the precious metal have led to a rise in the theft of catalytic converters
Global efforts to clean up petrol cars are driving a record surge in the precious metal palladium, which has rallied 8 per cent in the first week of the year to more than $2,000 a troy ounce. The precious metal, which is now more valuable than gold, has benefited from continued demand from the car industry for palladium-based catalytic converters on exhausts, along with limited supply from mines in South Africa and Russia. Prices for palladium have surged by about 25 per cent since the beginning of October. Demand for car catalysts has increased over the past few years due to stricter emissions regulations in Europe and plans in China to toughen standards.
Catalytic converters take toxic emissions and produce carbon dioxide, water and nitrogen. Palladium-based catalysts are also used in hybrid cars, which are powered by engines as well as batteries. Often hybrid cars require greater quantities of the metal, since the engine is required at short notice and does not have time to warm up the catalyst. The high price of palladium has led to a rise in the theft of catalytic converters from cars.
Last year Toyota, which makes the Prius hybrid car, warned drivers in the UK to take precautions to prevent theft by buying a “Catloc†device, which is fitted around the converter to stop it being cut out. Analysts at Bank of America Merrill Lynch expect carmakers to struggle to source more palladium in the next few years as global supply is set to remain flat, at about 10.2m ounces. Last year it rose to 10.5m ounces, from 9.9m.
The price of the silvery-white metal overtook gold in December 2018 for the second time, having been more expensive for a period spanning 2000 and 2001. On Thursday palladium was trading at $2108 a troy ounce, to gold’s $1546. Palladium’s price rise has boosted the stocks of South African miners, sending the FTSE/JSE African Platinum Mining index up 4 per cent already this year. Michael Widmer, an analyst at BofA, said big carmakers had begun to consider substituting palladium for other materials, such as platinum or rhodium, which are in the same family of precious metals. Rhodium prices are up by about 15 per cent this year, outpacing palladium.
“Carmakers are starting to look into substitution. It will probably take another 12 to 18 months,†Mr Widmer said. “You can get hold of palladium but you have to pay up for it.†He added: “The quicker they do the substitution, or re-jig the catalysts, the quicker the rally will ultimately come to an end.â€
Source: https://www.ft.com/content/9101bd22-3233-11ea-a329-0bcf87a328f2
Tags: clean energy, CSE, palladium, PGM, PGM Demand, stocks, tsx, tsx-v