NEW YORK (Scrap Monster): Palladium’s fundamentals should gradually improve over the course of 2012, said BNP Paribas, forecasting a supply deficit this year and next.
“We expect palladium to average US$825/oz in 2012 and US$1,125/oz in 2013 and to outperform the other precious-metals (gold, silver and platinium) in the medium term,” said Anne-Laure Tremblay, precious-metals strategist.
The 2012 forecast is down just $10 and the 2013 outlook is the same as BNP’s previous forecasts on Feb. 7. Palladium has underperformed the rest of the precious-metals complex so far in 2012, with the market still likely in a supply surplus.
However, BNP added that palladium has better fundamental prospects than the other metals. Palladium is predominantly used in gasoline vehicles, which constitute 75% of global vehicle production.
The U.S. car market has posted double-digit growth since October, and auto-catalyst demand benefits from stronger growth in emerging markets. “Another positive factor for palladium auto-catalyst demand in recent years has been substitution,” Tremblay says.
“The introduction of bi-metallic catalysts has seen the share of palladium in the catalytic systems of diesel vehicles increase to an estimated 23% in 2011.” BNP looks for palladium’s catalyst demand to rise 5% in 2012, about the same rate as in 2011.
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