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Johnson Matthey's report triggered a 7 percent jump for palladium and only a 2 percent on platinum; Saxo Bank said in a report.

17 Nov 2012

Commodity Online
In “Platinum 2012 Interim Review” Johnson Matthey, a world leader in platinum distribution had projected a shortfall of 915,000 ounces in palladium for 2012, a substitute for platinum, due to lower mine supply, reduced Russian stock sales (down to 250koz from 755koz in 2011) and record demand from auto catalytic manufacturers. The report triggered a 7 percent jump for palladium and only a 2 percent on platinum; Saxo Bank said in a report.

While platinum is very dependent on mine supply from South Africa, palladium's biggest single source of supply for many years has come from the release of stocks accumulated by the former Soviet Union. These reserves, whose size has never been released, are dwindling and could be gone within a few years leaving mine and scrap as the two main sources of supply.

Palladium, being part of the platinum group metals, has a reasonable strong correlation to platinum but also takes direction from other precious metals such as gold and silver.

The price action during the last couple of months has therefore primarily been driven by the rally and subsequent retraction of gold and platinum.

The market will maintain its focus on the supply deficit but whether it will result in an outright or even relative better performance compared with platinum remains to be seen.

Palladium is the least traded of the two and often suffers from lack of investor interest due to its illiquidity and ability to trigger sharp price moves in both directions. It remains the worst performing metal this year as it is down five percent compared with plus 10 percent on platinum.

So far during 2012 platinum has outperformed from costing 2.13 ounce of palladium in January to a recent peak of 2.63 ounce.


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