The price of the precious metal palladium has dramatically increased on the global commodities market and it is now considered more expensive than gold.
The price of palladium has surged by over 25% in the last two weeks alone and it has almost doubled over the past year. Palladium is now priced at approximately $2,500 per ounce, which is currently more expensive than gold.
The current price increases is not expected to slow down any time soon due to existing pressures that push the price up.
The precious metal palladium
Palladium is a shiny white metal that belongs to the same group as platinum, ruthenium, rhodium, osmium, and iridium. Majority of the global palladium supply comes from Russia and South Africa.
Most palladium is extracted as a byproduct in the mining of other metals, particularly platinum and nickel. It is most commonly used as a critical component in catalytic converters, a part of a car's exhaust system that controls emissions.
It is mainly found in petrol and hybrid automobiles.
More than 80% of palladium is used in catalytic converters, which transforms toxic gases, such as carbon monoxide and nitrogen dioxide, into less harmful nitrogen, carbon dioxide, and water vapor. It may also be used in electronics, dentistry, and jewelry.
In recent years, the increase in the price of palladium has been driven by the growing incidence of theft of catalytic converters globally. According to London's Metropolitan police, the number of thefts in the first six months of 2019 were more than 70% higher than the whole of 2018.
Supply and demand problem
In short, the ongoing surge in palladium price is due to demand overtaking supply. In 2019, the amount produced of the precious metal is projected to be below the global demand, making it the eighth consecutive year that palladium demand is higher than supply.
Since palladium is a by-product of platinum and nickel mining, producers are unable to increase palladium output in response to rising prices. This trend is forecast to continue as South Africa, which produces about 40% of the global palladium supply, said that its output of platinum group metals, including palladium, fell by 13.5% in November compared to the previous year.
