The rare and precious metal palladium hadn’t made too much of an impression on the futures trading market until the second quarter of 2017 when experts started to sit up and pay attention. Palladium has outperformed gold, silver, and even platinum on the futures market this year, and experts speculate that this bullish trend could continue well into 2018. Matmatch tracks its progress.
Palladium is extremely rare, much more so than gold or platinum. It belongs to the platinum group metals (PGMs), along with platinum, rhodium, iridium, ruthenium, and osmium. Palladium shares many of its physical and chemical properties with its close relative, platinum, such as a soft silver-white color and good malleability and ductility. But palladium weighs approximately half as much as platinum and it is significantly harder and thus more resistant to wear. It can absorb extremely large quantities of hydrogen.
Deposits containing palladium are quite rare: the world’s supply comes mainly from Russia and South Africa, as well as Canada and the United States in smaller quantities. The demand for palladium has exceeded supply for at least the last six years, mostly thanks to the demand for catalytic converters that reduce harmful emissions in automotive applications.
Palladium’s Role in Catalytic Converters
Palladium’s increased demand can mainly be attributed to the global demand for vehicles. Since the U.S. government introduced the requirement that every vehicle be fitted with a catalytic converter in the 1970’s, the automotive industry has standardized them and they are now part of every modern vehicle’s exhaust system. Palladium is used together with platinum as the catalyst in catalytic converters, thanks to the rare metal’s ability to speed up petroleum cracking, hydrogenation and dehydrogenation and some carbon bonding reactions. Palladium burns carbon monoxide and hydrocarbons to reduce the emissions produced by evaporated fuel that remains unburnt as it leaves the exhaust system and enters the atmosphere.
Palladium’s Necessity Causes Prices to Soar
At the time of writing, palladium was trading at USD $1,003.10 per troy ounce. It has outperformed every other precious metal in 2017 with a gain of more than 50% in the past twelve months. Prior to 2017, palladium had not reached a price of over $1000 per troy ounce since the turn of the millennium, and its price now exceeds that of platinum.
While palladium demand increases for automotive and jewelry applications and investment in particular, the supply remains limited. Factors that influence the deficit include mining hindrances in South Africa and speculation that the Russian supply may be dwindling.
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