FILE PHOTO: Molten nickel is poured at Norilsk Nickel's Nadezhda metallurgical plant in the Arctic city of Norilsk, January 23, 2015. Picture: REUTERS / POLINA DEVITT
FILE PHOTO: Molten nickel is poured at Norilsk Nickel's Nadezhda metallurgical plant in the Arctic city of Norilsk, January 23, 2015. Picture: REUTERS / POLINA DEVITT

Moscow  — The global palladium market will remain in structural deficit in 2019, Russia’s Norilsk Nickel said on Tuesday as it reported an 81% leap in first-half net profit.

Norilsk Nickel, the world’s largest palladium producer, said that first-half net profit jumped to $3bn as London palladium prices rose 40%. Palladium prices hit a three-week high in London on Tuesday.

Higher prices for palladium and increased output offset a decline in prices for nickel, copper and platinum amid concerns about US-China trade negotiations and a slowdown in the global economy, Norilsk Nickel president and co-owner Vladimir Potanin said in a statement.

The company expects a global palladium deficit of 600,000oz for 2019 because of growing demand from the motor sector due to tighter emission regulations in all major markets. Palladium is used mainly in emissions-capping catalytic converters for vehicles.

Norilsk Nickel, vying with Brazil’s Vale to be the world’s biggest nickel producer, said it expects the global nickel deficit to narrow to 60,000 tonnes in 2019, with Indonesia and China increasing their nickel pig iron (NPI) output.

Shares in Norilsk Nickel rose 2.3% in Moscow, outperforming a 0.9% gain for the broader index on its financial results and stronger than expected dividends thanks to higher revenue and lower costs, BCS Global Markets analysts said in a note.

Given its $2.2bn free cash flow, Norilsk Nickel recommended an interim dividend of 883.93 roubles ($13.27) per share, equating to $2.1bn in total.

Norilsk Nickel is part owned by Potanin and aluminium producer Rusal. Its first-half capital expenditure was unchanged from a year ago at $500m.

Norilsk Nickel also said that 2019 total capital expenditure was expected to reach up to $2.2bn as its Talnakh concentrator and South Cluster mining projects enter the active construction phase in the second half of 2019.

The company’s first-half earnings before interest, tax, depreciation and amortisation (ebitda) totalled $3.7bn, up 21% year on year, on revenue that rose 8% to $6.3bn.

Reuters