eBusiness Weekly
Johannesburg. — Advances in electric vehicles powered by batteries will have a “devastating impact” on palladium in the future, but in the meantime the metal is experiencing a rare moment of being more expensive than platinum. But that raises its own risks.
In the latest Commodities Compendium from Macquarie Research, analysts noted this was only the third time that the price of palladium had overtaken that of platinum since 1931 and 2001.
SA is the world’s second-largest supplier of palladium behind Russia. The metal is used to make autocatalysts for petrol-fuelled engines and remains an important market for South African miners, which primarily focus on platinum.
The Macquarie report shows that recycled palladium from autocatalysts built into exhaust systems will reach 2,88-million ounces by 2022, overtaking the 2,814-million ounces of metal coming from SA and Zimbabwe, which together will be more than Russia’s 2,7-million ounces of palladium.
The electric vehicle story, “which will be devastating, seems too distant to matter enormously [for palladium].
“For platinum we see upside — much of the technological bad news is priced in, gold will support and eventually boost, and the global economic uplift will help jewellery demand,” the Macquarie analysts said.
The price gap between palladium and platinum was narrow and there was little incentive for autocatalyst makers to switch the one-eighth of an ounce of palladium per unit with platinum, which could be used in petrol engines, they said.
There was no other demand for palladium, unlike platinum, which had uses in jewellery and industrial applications, said analyst Matthew Turner.
“Platinum will evolve into a kind of mini-gold, a jewellery metal, but we are wondering about substitution back into petrol cars for platinum,” he said. “We do think over time autocatalyst demand for both metals will be similar and both will in the end decline due to electric vehicles, but it’s not an immediate thing at all.”
Macquarie analysts forecast platinum demand in autocatalysts falling to just above 1,7-million ounces a year by 2022, from nearly 2-million ounces in 2017, while palladium demand for the same use was predicted to decline to 4,87-million ounces from 5,79-million ounces in the same period. — Business Day.
