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Palladium Prices Return To Earth, But Supply Concerns Remain

After registering a record high earlier this month, palladium prices dropped about 17% early last week. Palladium prices had a sharp correction, as worries over shortage in its supply from major producer Russia came down several notches.

Russia accounts for 40% of global palladium mine production.

Palladium is a crucial component in automobile catalysts. Russia is the top producer in the world, followed closely by South Africa.

Palladium prices surge after invasion

For the past few weeks, palladium prices surged dramatically following Russia’s invasion of Ukraine.

But early last week, gold and palladium prices slumped after a long rally following some progress in Russia-Ukraine peace talks, reported news agency Reuters.

Palladium, platinum and rhodium are valuable for their catalytic qualities.

On March 7, 2022, palladium prices touched an all-time high. The spike came amid concerns that sanctions would disrupt exports from Russia following its invasion of Ukraine.

Spot palladium had gone up to U.S. $3,442.47 an ounce, surpassing a previous record set in May 2021. This year itself has seen palladium prices rise by 76%.

Supply concerns

Supply from Russia, which accounts for about 40% of all mined production, was a matter of concern. Much of European airspace is closed to Russian air traffic, making it more difficult for top miner MMC Norilsk Nickel PJSC (Nornickel) to ship palladium.

The Russian mining giant had also announced it had secured alternative routes for supply of its palladium, according to one report.

Some experts and analyst firms, such as Goldman Sachs, however, opined that palladium shipments from Russia were unlikely to face too much disruption. They said the supply route could be redirected to Asia and then re-exported to other parts of the world.

The removal of palladium refiners from London trading could have added additional support to prices. But last week came the news that Russian refiners were allowed to continue to sell platinum and palladium in London.

“Due to the terrible events taking place in Ukraine, the LPPM has reviewed its Good Delivery list and the US, EU and UK sanctions,” the London Platinum & Palladium Market said March 7. “Following that review it has decided to make no changes to the Good Delivery list.

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“We will however continue to monitor and review the situation.”

Meanwhile, the London Bullion Market Association announced the suspension of Russian gold and silver bars. LBMA suspended six Russian refiners “in light of UK/EU/US sanctions and to ensure an orderly market.”

By AG Metal Miner

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