Hehehe. "Palladium is a rare metal produced mostly in two countries"

Palladium smashes $US1500 mark as shortages ignite record-breaking rally

The global deficit looks set to "widen dramatically" this year, according to Johnson Matthey, a leading maker of autocatalysts. BlackRock's Evy Hambro told Bloomberg TV this week that a "massive shortage" has built up as the auto market moves away from diesel-powered vehicles.

"Until you get an increase in supply coming onstream, which isn't going to happen for a few years yet, this is going to result in a tight market and prices generally trending higher," Philip Klapwijk, managing director of Hong Kong-based consultant Precious Metals Insights, said on Wednesday.

Tighter supplies of palladium, used mainly to curb emissions in gasoline vehicles, have spurred a robust borrowing market for the metal, prompting investors to pull the material from exchange-traded funds and offer them for lease. Heraeus, a refiner, said physical palladium ETF holdings fell to 700,000 ounces at the end of 2018, down from a peak of 2.9 million in 2014.

It's hard to gauge the exact level of global stockpiles, but various sources have estimated a range between 10 million and 18 million ounces, which equates to roughly one to two years of demand, Heraeus said.

Tighter emissions rules are "outweighing the weakness in global auto sales and the growing threat from EVs", said Matthew Turner at Macquarie Group. "So while we've known about deficits and projected deficits for years, the market's ability to adjust to them is unusually constrained.

"Palladium is a rare metal produced mostly in two countries, so it may not be possible to boost output immediately. More than 80 per cent comes as a byproduct from nickel mining in Russia and platinum mining in South Africa, so supplies depend on the extraction level and investment in other minerals.

"The jump in palladium has also aided South African producer Anglo American Platinum, and the company expects the three major platinum-group metals, including rhodium, will again be in a combined deficit in 2019. "Automotive demand seems set to increase, even with little or no growth in vehicle sales, as average vehicle size increases and emissions rules tighten," it said this week.

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