The palladium spot price has significantly increased because of worldwide supply and demand issues. Analysts and investors expect this trend to continue. Surprisingly, only a decade ago, palladium was under $200 an ounce.
This year alone, the highly-sought-after metal shot up 46%. Experts predict the metal could soon go into the $2,000 range in the next year or two. Although not always a popular metal, palladium is more rare than gold and more valuable now too.
Palladium Supply & Demand
Demand is high for palladium, but not primarily from investors. Industrial demand is keeping palladium prices high while supply continues to dwindle year after year. Over 80% of palladium demand is from the auto industry.
In fact, demand is so high right now for palladium that thieves are stealing catalytic converters. Reuters recently predicted that palladium is likely to rise still higher through 2020 and 2021. They additionally conclude that physical palladium is even harder to find.
The market for palladium has moved into what’s called backwardation. This is when supply is so tight that contracts for the metal for immediate delivery are much more expensive than arrangements for the metal for later delivery.
Lastly, consumers are demanding more palladium in their jewelry as researchers find more use for palladium in the biomedical industry.
New Emission Regulations
The European Union is setting a target on environmental regulations to cut emissions by at least 40% by 2030, according to Bloomberg Intelligence analyst Eily Ong. These policy changes are already leading to a decrease in diesel engines in favored of gas-powered, which therefore increases the demand for palladium for use in catalytic converters.
The Euro 1 to 6 standard classifies vehicles from 1 (most polluting) to 6 (least polluting), and many Euro 1 and 2 cars are starting to become banned. Frankfurt, Germany, is going even further and will ban all four and under diesel and all Euro 1 and 2 gasoline cars.
Stricter Emission Standards
Real Driving Emission tests are underway. It requires new vehicles to undergo outdoor driving tests (instead of in the lab) to test emissions in the real world and variable conditions. Real Driving Emission tests (RDE) is now underway in many parts of Europe and China.
China has six emission standards to implement by summer 2020 and will provide additional demand for palladium. Therefore the industry will have to work hard to restock this metal. The new laws require over 30% more palladium to go into each vehicle.
The Future of Internal Combustion (ICE) Vehicles
According to Bloomberg Finance, it will not be until the year 2040 that ICE vehicles will lose 50% of it’s customers to hybrids and electric (battery charged) cars. For many more years to come, gas-powered cars are here to stay. Furthermore, hybrid vehicles will require even more palladium loadings. Since many prefer their electric cars with hybrid components, palladium demand is here to stay.
What Are Catalytic Converters Used For?
Palladium has been called the “sweet spot” for fighting pollution caused by automobiles. Gas-powered cars rely primarily on fossil fuels as gas to power the vehicle, which creates toxic air pollution.
Catalytic converters are here to help combat this. Three primary pollutants from vehicles are hydrocarbons, nitrogen oxides, and carbon monoxide. A catalytic converter works to scrub those pollutants out of the internal combustion engine.
Many believe that car manufacturers will find a way to replace palladium with it’s cheaper priced platinum in catalytic converters. However, many car manufacturers are saying that this option is nowhere in the near future.
Palladium has higher thermal durability and more efficient in modern gas-powered cars.
So, is Diesel Fading out?
Diesel cars were once considered to be the solution to a cost-effective yet environmentally friendly car. That is until the 2015 Volkswagen scandal when many found out that Volkwagon had been lying on their US emissions tests. Diesel cars are pretty toxic to the environment, and are now phasing out. Diesel uses platinum in their catalytic converters instead of palladium. The idyllic image of clean diesel is no more.
Research from the International Council on Clean Transportation states that even the newer and “cleaner” diesel cars failed to meet Europe’s new strict emission standards in real-world driving tests.
What is Palladium?
William Wollaston made palladium’s discovery in 1803. Palladium is one of the six PGM (platinum group metals). It is primarily found through digging up other metals, asteroids (named after one!) and the earth’s crust. Most of the world’s palladium, 90%, is a byproduct of other metals like nickel and copper. Palladium is a unique metal on the earth.
Where is Palladium Mined?
Buy Your Palladium Today From Bullion Exchanges
At Bullion Exchanges, we guarantee the best palladium prices. Purchase your palladium here today, and we will carefully package and ship to you. Bullion Exchanges carries a wide variety of precious metal bullion products from around the world.
ABOUT BULLION EXCHANGES
Bullion Exchanges is a trusted precious metals retailer located in the heart of New York City’s Diamond District. We carry a variety of products, from the ever popular gold and silver and other metals. We also have a professional numismatist on site, and are ready to offer our expertise to you.
Gold and silver have long been a stable and popular way to introduce hard assets to any financial portfolio. This becomes even more important in times of uncertainty and stock market volatility. As our world’s economic climate becomes increasingly unstable in the face of emerging industries and unforeseen political shifts, many have begun seeking out investments that have stood the test of time. We believe that precious metals like gold and silver, with their centuries long history, are a perfect way to expand your financial security in these surprising times. And unlike the generic metals offered at banks and private mints, Bullion Exchanges makes it possible for you to select a wide variety of products from among the industry’s top leaders.