Posted on 10/23/2017 9:29:25 AM PDT by Attention Surplus Disorder
Sixteen years ago was the last time that platinum was cheaper than palladium in 2001 (black vertical line). By then palladium had spent a year in the dominant position over platinum, and at that time the price of both metals had been fluctuating around $600 level. Since then platinum has returned to its usual upper position to palladium, and the gap was growing exponentially in favor of platinum until it reached the peak with the $1600 of supremacy in 2008. After that, the gap began to narrow and last month it entirely evaporated as a global shift in the automotive industry showed a growing demand for gasoline and hybrid cars (palladium related) amid slowing demand for diesel cars (platinum related).
The Volkswagen emissions scandal started on the 18th of September 2015 (orange vertical line), when the United States Environmental Protection Agency (EPA) issued a notice of violation. I dedicated a post in 2015 to that significant event. The price of both metals continued higher right after that news as the reaction time to such a report always has a gap in such a giant industry.
But in the next month, we saw a massive drop in both metals of more than $100, and the fall of palladium price had lasted longer. The weakness, then suddenly ceased and both metals won back all of their losses and climbed into positive territory. And two years after the investigations started platinum is still in a little profit as palladium just hit a multi-year maximum with more than $300 in the green.
It looks like a tangible shift in the automobile industry has started to evolve this year as sales of gasoline-powered cars have overtaken diesel in the first half of this year for the first time since 2009 according to the European Automobile Manufacturers Association (ACEA). Sales of “alternative” vehicles - hybrid, electric, LPG (liquefied petroleum gas) and natural gas-powered ones rose by more than 35% (gasoline-powered cars +10%, diesel-powered vehicles minus 4%).
[snip]
Palladium is in a vast range which lasts from the previous century. This range is also extensive as the price fluctuates between $144 and distant $1100 mark. The strong move to the upper side started in 2008 making the higher top (2014) and higher low (2016). I used these points to build an orange uptrend within the range. The upside of this trend overlaps the major top area at the $1100 mark with a small margin. I think the current upside move could tag that area as we can see some acceleration in the price action.
this *is* an excerpt. Good charts at source.
Anyway, this is kind of interesting because the price relationships between & among these metals go back many decades, but the shift in vehicle use is warping the supply/demand picture.
Interesting information. Thanks.
I would like to see a drop in Pd prices, but... maybe not. Not if this change really is the result of changes in automotive catalyst usage. The Auto market dominates all other uses for such noble metals.
Absolutely. (The Auto market dominates)
Pd (trading symbol /PA, chemical symbol Pd) is very very tricky to trade. I have never traded the futures. Very thin, huge overnight moves. And, I would suspect the moves will be become even more dramatic with this price crossover. Which is historic.
I once had 2 Cana Maple Leafs in Pd @ about $700. Gone, breakeven.
I also had 1.5 oz phys Platinum which I sold for $1900/oz which was great since I bot it for for about $1200.
The best metals trade I ever did was selling 2/3rd my silver @ 38.50
So, I learned something I did not know. I knew platinum was used in catalytic convertors but did not know palladium was an alternative. I look it up and discover that Rhodium, another noble metal, is also used in convertors. I was curious and looked up the prices and found this link. http://www.infomine.com/investment/metal-prices/rhodium/
Interesting that there was a collapse in the price of Rhodium in’08. Now I have to go read about Ruthenium.
I would think that Pt and Pd have additional value because they can more easily escape detection than gold when moved across borders.
Just melt into a car bumper or maybe some “silver” plates and I’m sure you can get through. As long as you have a device to determine the atomic weight it’s fine. There are such devices that aren’t too much money that measure resistance of a metal to current which directly correlates with the atomic weight.
At one time, Rhodium sold for nearly $10K an ounce. I *do not* think Rh has the catalytic properties of Pd or Pt, but I could be wrong. But I would in any event imagine it is simply too damn rare to even be considered.
At the peak of Pt usage for cat converters it was priced over $2K, $2200 IIRC. (Too lazy to look up the chart, easily obtainable @ kitco.com) It was this pricing that drove the automakers to search for an alternative. In the years since they discovered how to use Pd, demand and thus price has steadily risen.
There was a time when it was thought that Russia had the absolute corner on Pd supplies and it was priced nearly $2K.
Pd has a very interesting property in that it can absorb about 500 times its volume in Hydrogen.
#randommetalfacts
Mazda is bringing out a new engine that will be 30+% .
That one might not need a cat converter.
You’ll probably want to look up iridium too, the last of the five platinum group metals. One interesting thing about iridium is that it was apparently quite prevalent in the meteorite that hit the Yucatan area and wiped out the dinosaurs. The presence of iridium in global soils from that same period was a big clue to the meteor strike.
Got a bunch of Maples at around $380 DCA, and a few Russian Balerinas at a bit more.
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