Page 78 - MEX-Yearbook-2017
P. 78
Research Paper & Articles
Palladium:
Metal on Fire
2017 witnessed the distinctly diverse 80 percent of the metal’s overall production is conventional automobile industry and thereby
performance being recorded within the used by the automotive industry for this very the palladium demand could be substantial.
commodity market. It was a disappointing purpose. The inclining popularity of gasoline Among its four counterparts including gold,
outcome when compared with the strong and hybrid vehicles which use palladium clad silver, platinum and palladium, the palladium
figures posted nearly across the board in catalytic converters coupled with the decline market is the smallest and least liquid in
2016. In hindsight, there was a roughly even in the demand of the diesel engines which use comparison. This means that any sudden
split between the gainers and losers. While platinum converters salvages the theory of why injections or withdrawals of speculative funds
sugar took the cake for the bearish trend, the palladium was seen soaring while platinum are more likely to prompt sharp price swings.
bullish was somewhat surprisingly attained by lagged behind. Palladium is also included in the safe haven
palladium. During the first five months of 2017, diesel cars assets category, which states that during
Palladium had rallied in 2016 posting an experienced a massive decline in the market times of market turmoil, traders shift their
impressive 20.89% return on the prices. But share in Western Europe, falling from 50 to 46 investments away from the traditional asset
in 2017, palladium was in a different league percent, as per the data from LMC Automotive. classes including stocks and bonds and into
altogether. Apart from May, palladium has The shift has almost been accelerated by gold and silver and also to a lesser extent to
posted a positive return for every month leaving the “Dieselgate” scandal. The scandal found platinum and palladium. Although the global
the heavyweights including gold, platinum and German Car Company Volkswagen cheating in economy continued to paint a growing canvas
silver behind. Having begun the year at $678 its emission tests by making its car appear far in 2017, markets including the West continued
per troy ounce, the prices surged by a mammoth less polluting than was truly the case. The US to experience uncertainty which also explained
51% to attain the highest price of $1024.51 per Environmental Protection Agency discovered heightened demand boost for palladium.
troy ounce on November 9, the highest since 482,000 cars on US roads to have emitted up to The supply-side factors are further helping
January 2001. Palladium had been rallying since 40 times more toxic fumes than was permitted. to boost palladium prices. On the New York
2016 after a lackluster display in the preceding The company admitted cheating which impacted Mercantile Exchange platform, the stocks of
years and posted the 16-year high as a result. 11 million cars on a global scale. Displaying palladium declined by more than 40 percent
Market pundits view the strong showing of concern for further regulations as a result of in 2017, the lowest in about 14 years. There
palladium as a result of a combination of factors, Dieselgate, car buyers are increasingly rejecting are indeed additional long-term factors which
rather than any one dominant factor. According platinum-rich powered vehicles in favor of have underpinned the bullish performance of
to UBS analyst Joni Teves, “Perhaps there isn’t palladium-rich gasoline cars. palladium. Since 2011, the demand had been
one big explanation or a specific catalyst that Palladium has few industrial uses other than the outpacing the mining activities, with 2017
has led to the recent market moves, but rather catalytic converters. In regards to the jewelry seeing a global production deficit for the sixth
a confluence of factors that have actually been sector, the demand has effectively vanished in consecutive year. As per the data of Johnson
brewing (and market participants) have been the recent years, while investments in palladium
discussing for a while.” remain at inconsequential levels. Should the
Among all the catalysts, perhaps the most electric vehicles begin to surge in popularity, the
decisive has been the shift in the consumer damage that might conceivably be done to the
preferences with the automobile industry. The
most common use of the metal is in the catalytic
converters which in turn prevents the release of
harmful emissions. In statistical terms, about
77 | MEX NEPAL YEAR BOOK 2017
