Palladium is on a tear with its spot price increasing 45% year on year
Palladium has been on a tear this year. Its spot price increased 45% year on year in the first half of 2017, and it now trades at a 16-year high. Although the rally has largely been attributed to the strong demand from the automotive industry, there’s a geopolitical risk premium baked into the price. Approximately 67% of palladium produced is used in catalytic converters, which convert up to 90% of the harmful gases in vehicle exhaust to less noxious substances. Global auto sales, up 4% for the year, are driven by a global increase in SUV sales, the ongoing shift from diesel to petrol engines in Europe (diesel engines, alternatively, use platinum), and tightening emission legislation. Sales of cars fueled by petrol have been particularly strong in China and India. According to Jeffrey Christian, MD of CPM Group, car sales in China have been "borrowed" from future years through offering rebates and tax cuts. In the first half of the year, vehicle sales in China rose 4.3%, to 13.4-mil...
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