Palladium has surged to record levels just shy of $3,000/oz in recent weeks. In the view of Bart Melek, Head of Commodity Strategy at TD Securities, the precious metal seems poised to prolong the upward trajectory amid persistent supply worries.
See: Palladium is the only precious metal set to shine – CE
Continued palladium tightness is on the cards
“The reflation and super-cycle narrative, along with hopes of a continued cyclical demand recovery as vaccine programs continue, supply disruptions and a global trend toward tighter emissions standards, have all boosted the metal.”
“Biden's recently passed $1.9 trillion stimulus bill and the planned $2+ trillion infrastructure program, along with China's surprising economic performance, are additional bullish factors.”
“As Russian and South African mining sectors deliver less metal than expected, due to various problems on their mine sites, the strong demand outlook should see deep deficits materialize over the next several years. This, along with a lack of readily available inventory could well see palladium trade significantly above TD Securities' Q4-2022 average price target of $3,200/oz.”
“Should there be additional supply disruptions, firmer-than-expected demand, or less substitution for platinum than predicted, palladium could follow the exponential path taken by rhodium as autocatalyst demand is relatively price inelastic due to pollution regulation standards.”