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Ag Metal Miner

Ag Metal Miner

MetalMiner is the largest metals-related media site in the US according to third party ranking sites. With a preemptive global perspective on the issues, trends,…

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Palladium Prices Are Soaring As Russian Sanctions Sting

The Russian invasion of Ukraine has yielded commodity price volatility spanning across sectors.

Russia is a major producer of platinum and palladium. Palladium primarily goes toward catalytic converters in car exhausts.

As Western countries hit Russia with sanctions, some companies will have to look for alternative sources. (As always, buying organizations should make sure they are up to date on the best sourcing strategies.)

Palladium prices have surged in recent weeks, rising by 13% month over month as of Friday.

“Russia and Ukraine lead global production of metals such as aluminum, nickel, copper, and iron ore,” according to a special report by Dun & Bradstreet titled “Russia-Ukraine Crisis: Implications for the global economy and businesses. “Nonavailability of Russian, as well as Ukrainian supplies, could cause high prices along with volatility. For rare metals like neon, palladium, and platinum, Russia has been the primary supplier to Europe. Ukraine is also a vital source of rare metals (iron ore, manganese, titanium, gallium, kaolin, zirconium, and germanium) to Europe and the rest of the world.”

Platinum, nickel prices rise

On the other hand, platinum typically goes into diesel catalytic converters. Russia is also a major producer of platinum.

As Dun & Bradstreet notes, South Africa is a potential alternative source of platinum for automotive manufacturers (or other platinum end users).

Meanwhile, nickel prices have also surged.

“Given that nickel is a critical raw material in the manufacturing of electric car batteries, and copper is widely used in electronics production and residential building, businesses engaged in these sectors could face increasing costs for these metals and potential supply chain disruptions,” the Dun & Bradstreet report notes. “The automobile and aerospace industries of the U.S., EU, and UK depend on titanium from Russia, with limited alternatives available.”

The LME nickel price had closed last week at nearly $29,000 per metric ton, or up 26% month over month.

That proved minor relative to Monday’s spike. During Monday trading, LME nickel jumped a whopping 90% to over $55,000 per metric ton.

Sibanye-Stillwater on supply impact

Speaking of South Africa, platinum and palladium producer Sibanye-Stillwater recently released its operating and financial results for the year ending Dec. 31, 2021.

The producer said refined PGM production has returned to “normal levels” from the onset of the COVID-19 pandemic and operational disruptions at Anglo Platinum and Norilsk Nickel in 2021.

Related: U.S. Oil & Gas Association President: “Cut The Crap And Approve Our Permits”

“The conflict in Ukraine and sanctions being imposed on Russia could impact on supply of palladium and platinum from Russia, which accounts for 37% and 9% of global production respectively, supporting higher PGM prices,” the firm said in its recent report. “Secondary supply is also expected to recover as supply chain challenges abate.”

The firm forecast a platinum surplus of 1 million ounces. Meanwhile, it forecast the palladium deficit growing to 145,000 ounces.

Supply constraints continue to cap sales

As for sales, low inventory continues to cap automotive sales.

J.D. Power and LMC Automotive forecast new-vehicle retail sales to reach 1.06 million units in February. The forecast marked a decline of 11.1% year over year.

“With retail inventory on pace to finish a fourth consecutive month below 900,000 units and ninth consecutive month below one million units, the new-vehicle supply situation is not displaying signs of near-term improvement,” said Thomas King, president of the data and analytics division at J.D. Power. “Therefore, sales in February are being determined by the number of vehicles delivered to dealerships rather than reflecting actual consumer demand.”

Average transaction prices in February reached $44,460, the report notes. That marks an increase of 18.5% year over year.

Actual metals prices and trends

While aluminum and other metals spiked as a result of the impact of the Russia-Ukraine war, hot-dipped galvanized prices fell 13.5% month over month to $1,503 per short ton, according to MetalMiner Insights data.

Meanwhile, the Korean 5052 aluminum coil premium over 1050 rose 9.0% to $4.56 per kilogram.

The U.S. shredded scrap steel price rose 0.6% to $482 per short ton.

The LME copper three-month price rose 3.4% to $9,945 per metric ton.

Lastly, the U.S. palladium bars price rose 6.85% to $2,419 per ounce.

By AG Metal Miner 

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