Palladium may remain under pressure during September

UNITED STATES September 09 2015 9:22 AM

NEW YORK (Scrap Register): Palladium is likely to remain under pressure for the short term and the supply and demand fundamentals for the metal are looking increasingly grim, said INTL FCStone in its monthly commodities outlook released during the Labor Day weekend in the US and Canada. 

According to INTL FCStone, the largest industrial use is for auto catalytic converters. While U.S. car sales were strong last month, a sharp slowdown has occurred in China, with sales also down in other emerging-market economies.

Analysts at INTL FCStone cited a report from key producer Norilsk Nickel saying that it sees a smaller supply deficit in 2015 and 2016 compared to 2014. 

“While acknowledging that South African production has recovered nicely, erasing a good chunk of the recent deficit, Norilsk states that it does not expect any significant production growth in 2016 and beyond as a weak price environment is curbing capital investments,” analysts added.

In addition, the producer cites additional supply risk coming from forthcoming negotiations with labor unions, as contracts expire in June 2016. 

While these are all valid points, the problem now is demand, especially from China, which is why INTL FCStone continues to see prices remaining under pressure over the short-term; during September, INTL FCStone sees prices trading between $520-$630 an ounce.