SOUTH AFRICA July 01 2014 6:35 PM NEW YORK (Scrap Register): Mitsubishi looks for tighter supply/demand fundamentals to be favorable for palladium over the medium to long term.

A strike in the South African platinum-group-metals sector was resolved last week, with Anglo American Platinum reporting its deal would add an average of 8.4% to the wage bill over three years.

Mitsubishi remains of the view that cost inflation, albeit relatively contained, will contribute to lower capex in the years ahead and a possible restructuring of the older western limb assets, which are principally mining high palladium and rhodium content UG2 ore.

The resulting tight palladium-market fundamentals should continue to keep prices well supported over the medium to longer term.

More immediately, with palladium now back above the 50-day moving average, the MACD (moving average convergence/divergence) in positive territory and the momentum indicator trending higher, Mitsubishi would look for palladium to extend its gains, possibly testing the $864 resistance level.

Exchange-traded-fund investors continue to favor palladium over platinum, Mitsubishi says, pointing out that in the first half of 2014, palladium ETFs have seen 844,000 ounces of net inflows, compared to 335,000 for platinum.