(Excerpt)
The demand for palladium is expected to remain strong in the
near-term due to introduction of tougher vehicle emission norms and
a marked shift in consumer preference from diesel to petrol
(gasoline) engines―the auto industry consumes more than half of all
palladium supply globally. Palladium is a key part of gasoline
catalyst systems. Though the demand for petrol vehicles is expected
to strengthen further, IHS Markit expects palladium prices to fall
slightly or stabilize in the short-term driven by the weakness in
light vehicle (LV) globally. Prices of palladium reached its record
high in late March, touching USD1,604 per troy ounce, but has
weakened ever since to around USD1,360 (as on 31 May). According to
KC Chang, senior economist at IHS Markit Pricing and Purchasing
Service, the current palladium price reflects long-term demand
expectations running well ahead of actual physical demand. Thus,
IHS suggests buying only on an as-needed basis, waiting until
prices move lower in second half of 2019.
According to Johnson Matthey's "PGM Market Report" published in
May 2019, palladium demand from automotive recorded a new high of
8.72 million ounces, up 2% year-on-year (y/y), in 2018, even though
there was a slight decline in global light duty gasoline vehicle
production. The company expects palladium demand to strengthen
further this year due to rising loadings on European gasoline
catalyst systems.
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