After topping a record $3,400 an ounce overnight on Russian embargo fears, June palladium futures pulled back slightly early on Monday after further weighing the extent of potential supply chain disruptions–but the most expensive of precious metals has still gained some 70% since the beginning of the year.
Early on Monday, palladium prices surpassed $3,440 an ounce, up from $1,900 at the start of the New Year, before paring some of those gains to around $2,977 by 1:00pm EST.
News that the U.S. is considering energy sanctions on Russia, and is in talks with Europe, helped drive the overnight surge in palladium prices, which are already responding to Western sanctions for the invasion of Ukraine.
Sanctions mean potentially devastating supply-chain disruptions at a time of soaring demand, particularly since Russia is one of the largest producers of palladium, rivaling South Africa, one and off, for the stop slot.
In 2021, Russia accounted for some 40% of the global supply of palladium, which is most notably used to reduce emissions in automotive vehicle engine exhausts.
"Palladium prices printed a new record as anxiety grew over a potential embargo on Russian material before cooler minds prevailed. Given the scale of Russia's dominance in global palladium production, any disruption in Russian flows would be catastrophic for the functioning of palladium markets," Reuters cited TD Securities commodity strategists as saying Monday.
The last time palladium hit a new record was last year, when it topped $3,017 amid soaring demand and a global push to reduce emissions.
Analysts now expect palladium prices to remain highly volatile, driven by the ongoing Russian war against Ukraine, Western sanctions and the potential for Moscow to attempt to use the precious metal as a weapon to starve Western businesses of supply.
By Julianne Geiger for Oilprice.com
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