TD Securities sees $940/Oz Palladium in coming months

UNITED STATES July 09 2014 3:34 PM NEW YORK (Scrap Register): Palladium has hit a fresh 13-year high and could rise to $940 an ounce, says TD Securities.

The Nymex September futures traded as high as $875.65 overnight, the metal's most muscular level since 2001, based on a futures continuation chart. Strong demand for autos, which use palladium for catalytic converters, are expected in the U.S. and China, and there is growing use from petroleum product refiners.

"Demand this year is projected to increase by just under 4%, with supply dropping sharply following a five-month strike in South Africa," said TDS.

"Investment demand in the form of palladium-backed exchange traded funds, which has hit new highs, is also contributing to the metal's good fortunes. Given our projections of a very deep primary deficit, price is projected to rally to an even more robust $940/oz in the coming months," said analysts with TDS.

Still, TDS cautions, there could be a modest correction before this target is reached.