Price Drivers
Though palladium is a precious metal similar to gold, these commodities do not always move in unison. Because there are various industrial applications for palladium (and for all platinum group metals), this commodity tends to perform better during economic booms. There are several factors that can impact the price of palladium; a few of the potential price drivers are outlined below:
Health of Auto Industry: Because the automobile industry accounts for a significant portion of global palladium demand, price for this metal can be impacted by the health of this sector of the economy. Greater automobile production generally equates to stronger demand for palladium, while tough times for the industry can put a dent in prices.
Technological Developments: Improvements to the recycling process have allowed for greater quantities of palladium to be recycled in recent years; to the extent that additional improvements are made there could be additional downward pressure on prices. Moreover, as automobiles continue to evolve, the supply side of the palladium pricing equation has been put into question somewhat. A rise in electric cars might translate into reduced demand for catalytic converters, which in turn impacts the need for palladium adversely. Palladium is also a key component of fuel cell technology, a process that can produce electricity and water by combining hydrogen and oxygen.
Gold/Platinum Prices: Though it was more expensive than platinum as recently as 2001, palladium is now considerably cheaper than both gold and platinum. Rising prices for other precious metals may prompt industrial users to shift towards cheaper palladium.
Replacements: Some vehicle manufacturers are substituting palladium for platinum, as the former is cheaper to obtain. Historically, only platinum has been able to be used in diesel catalytic converters, but new technologies allow about 25% palladium to be used. Experiments have shown that that percentage may go as high as 50% in the near future.
Though palladium is a precious metal similar to gold, these commodities do not always move in unison. Because there are various industrial applications for palladium (and for all platinum group metals), this commodity tends to perform better during economic booms. There are several factors that can impact the price of palladium; a few of the potential price drivers are outlined below:
Health of Auto Industry: Because the automobile industry accounts for a significant portion of global palladium demand, price for this metal can be impacted by the health of this sector of the economy. Greater automobile production generally equates to stronger demand for palladium, while tough times for the industry can put a dent in prices.
Technological Developments: Improvements to the recycling process have allowed for greater quantities of palladium to be recycled in recent years; to the extent that additional improvements are made there could be additional downward pressure on prices. Moreover, as automobiles continue to evolve, the supply side of the palladium pricing equation has been put into question somewhat. A rise in electric cars might translate into reduced demand for catalytic converters, which in turn impacts the need for palladium adversely. Palladium is also a key component of fuel cell technology, a process that can produce electricity and water by combining hydrogen and oxygen.
Gold/Platinum Prices: Though it was more expensive than platinum as recently as 2001, palladium is now considerably cheaper than both gold and platinum. Rising prices for other precious metals may prompt industrial users to shift towards cheaper palladium.
Replacements: Some vehicle manufacturers are substituting palladium for platinum, as the former is cheaper to obtain. Historically, only platinum has been able to be used in diesel catalytic converters, but new technologies allow about 25% palladium to be used. Experiments have shown that that percentage may go as high as 50% in the near future.
