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Palladium is Forecast to Once
Again Outperform Platinum in 2019

Divergent trends in platinum and palladium’s fundamentals continued in 2018 and are forecast to persist this year (and beyond). Platinum recorded a surplus last year of 349koz (10.8t), while palladium saw another hefty deficit of 821koz (25.5t). These impacted investor sentiment, helping drive palladium’s out performance of the platinum price. While more recent price developments may suggest a reversal, we believe these moves are driven by speculative forces and so are likely to be short-lived, notes Charles de Meester in the annual Platinum and Palladium Focus 2019 published by Metals Focus, one of the world’s leading precious metals consultancies. The flagship annual report on the PGMs market features comprehensive historical supply and demand statistics for 2010-2018, and a detailed 2019 forecast. The following outlines the key findings.

“As a result, our 2019 forecasts see platinum realise a surplus of 630koz (19.6t), and palladium a deficit of 574koz (17.9t). As a result, platinum above-ground stocks are forecast to continue rising, to 9.7Moz (302t) at end-2019, against 6.9Moz (215t) at the start of this decade. Palladium stocks, by contrast, have enjoyed near uninterrupted losses, from 17.7Moz (550t) at end-2010 to an end-2019 forecast of 12.9Moz (400t).

“Looking at the key areas of supply/demand, platinum autocatalyst demand is expected to post its third year of losses (of 2%), due to further weakness in the key diesel market in Europe and the lack of any substitution to platinum. The scale of the drop in 2019 is expected to be smaller than in 2018, due to concerns over meeting emissions legislation and also because of notable gains in heavy duty diesel.

Turning to jewellery, this will see a 3% y/y drop, led by a sharp fall in China. Physical investment is slated to ease by 15% y/y, but this compares with a strong 2018 total, while industrial offtake should rise by 4%. As such, we forecast total platinum demand to drop for a fourth year, by 1.2% to 7.70Moz (239t). On the supply side, mine output is forecast to rise by 3% in 2019, chiefly due to strong gains in South Africa (helped by a weaker rand and somewhat lower cost inflation).

“Concerning our platinum price forecast, investor sentiment towards the metal appears less bearish compared to 2018. This, coupled with our constructive view towards gold, is expected to deliver a further recovery in platinum price later this year. However, unsupportive fundamentals will still weigh on platinum, which explains our forecast of a 1% dip for platinum’s annual average this year to $875.

Switching to palladium, autocatalyst demand is forecast to rise by 3.6% in 2019 to a record high of 8.59Moz (267t), driven by the impact of tighter emissions standards on PGM loadings (in most regions) and an increased market share for gasoline vehicles in Europe. In addition, growing consumer preferences for larger vehicles in most markets, in particular in the US, is also putting upward pressure on loadings. Finally, demand will be supported by the current absence of substitution within gasoline to platinum, while concerns over rhodium could, for some models, lead to a partial switch in favour of palladium.

“Regarding palladium supply, this is forecast to increase by 4% to 10.11Moz (314t), led by a 5% increase in mine supply to 7.17Moz (223t). Most key producing countries are forecast to see higher output, which will offset losses in Canada. Recycling is also expected to post a 3% rise to 2.94Moz (91t), chiefly due to a new high from spent autocatalyst recycling.

“In spite of short-term headwinds (such as lacklustre car sales in China and the US, and concerns over the potential for substitution losses in light vehicles), we expect palladium to realise a physical deficit for the foreseeable future. As such, for 2019, Metals Focus believes that professional investors will eventually return to palladium, with prices forecast to surge by 45% y/y to an annual average of $1,490 in 2019.”

Source: The annual Platinum and Palladium Focus 2019 report published by Metals Focus, one of the world’s leading precious metals consultancies. To purchase a copy of Platinum & Palladium Focus available in hard copy as well as PDF formats, go to

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