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Updated 18:30 17/09/19

Palladium sets yet another record as price hits $500 p/oz more than Platinum

Liam Sheasby

By Liam Sheasby, News Editor

09 Jan 2019

The price of palladium is still on the rise in 2019 after a year of gains in 2018. The price per ounce is now $1,333.21 (£1,044) – higher than the gold price in GBP and a staggering $500 (£400) per ounce more than the value of an ounce of platinum.

Palladium has enjoyed a run of success thanks to the global economy performing well, in which car manufacturing enjoyed a bumper spell. Despite economies slowing down and the ongoing US/China trade war, palladium’s very limited supply and large supply deficit compared to demand has meant that the price for the precious metal has surged in value.

In comparison, platinum has fallen from favour following 2015’s Volkswagen emissions scandal, with platinum used in catalytic converters for diesel cars. There has some hope restored for platinum miners, with Hyundai announcing a new car programme that will require large quantities of the metal.

Despite this proposal being a few years off, experts are predicting a better year for platinum in 2019, with Aberdeen Standard Investments suggesting platinum’s prices have bottomed out and will soon bounce back. In a company-wide note, ASI said: “Our base-case scenario for platinum remains constructive, with a fair value of $1,000 driven by higher industrial demand, market volatility, and the South African rand. Under a bullish scenario, platinum may rise to $1,150”.

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Automotive manufacturing

With platinum and palladium both used in the production of catalytic converters, many people have questioned why car makers haven’t simply switched from the expensive and low-supply palladium and opted for the much fairer priced platinum.

The reality is that palladium is more suitable for both petrol and hybrid cars, offering better resistance against higher fuel combustion temperatures. The change from one metal to another would take time and work at manufacturing plants, estimated to be around two years in total, aside the amendments to vehicles in terms of their engine and exhaust systems. The amount of palladium needed is also less than how much platinum would be required, so while there are savings to be had the transition is not currently warranted compared to the time and effort that would be spent.

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