Palladium likely to average $715 an ounce in 2017

Published: Dec 21, 2016 13:16
Palladium is the fundamental favorite precious metal next year, according to Citi Research.

UNITED STATES December 21 2016 9:26 AM

NEW YORK (Scrap Register): Palladium is the fundamental favorite precious metal next year, according to Citi Research. The bank looks for palladium prices to average $685 an ounce in the fourth quarter, rising throughout the course of next year to average $715 an ounce in 2017. 
Global car sales are expected to stabilize, but loadings of platinum group metals in auto catalysts are expected to rise due to tighter emissions standards.
Meanwhile, a decline in Chinese government subsidies limits the pace of new vehicles that rely on alternative energy, such as electric or hybrid cars, analysts at Citi added.
Environmental policy in the No. 2 car market of the U.S. supports palladium demand in the medium term, Citi continues. The U.S. Department of Energy expects average U.S. gasoline LDV to incorporate around 6 grams of palladium per unit in 2020, a 33% increase from 4.5 in 2011.
Assuming the Bloomberg estimate of 6.1 million U.S. LDV or passenger cars were sold in 2011, roughly 968,000 ounces of palladium was consumed in the U.S. Alone.
LMC Automotive projections for U.S. car sales in 2020 suggests approximately 3.7 million ounces of gross palladium auto-catalyst may be consumed.
“This is substantially higher than our current U.S. demand forecast of 2.2 million ounces in 2020,” the Bank noted. “Hence, the combined effect of increased vehicle sales and the additional PGM loading per unit validates our constructive view of demand over the mid-term.”

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