UNITED STATES August 10 2016 9:14 AM
NEW YORK (Scrap Register): TD Securities looks for palladium to outperform sister metal platinum. Both metals are stronger for the year so far on the coattails of gold’s Bull Run plus supply deficits.
Global vehicle sales have improved in 2016, which benefits platinum and palladium since they are used for auto catalysts. However, TDS pointed out, data shows a sharp slowdown in European sales in July, which could hurt platinum more.
Many European cars are diesel-powered, which requires platinum, whereas gasoline-powered engines can use palladium. Amplifying this effect would be the spec positioning…which has been skewed to a much more rapid build of platinum longs versus palladium longs.
“A slowdown in European auto sales and record high spec longs is therefore likely to create a headwind for platinum on any further precious-metals upside, while it would certainly impact more negatively on the downside. Thus, we would expect palladium outperformance over platinum to continue for some time,” said analysts at TDS.