Supply shortage and boosted autocatalyst demand pushes palladium market to deficit in 2012

LONDON (Scrap Monster) : The global palladium market was pushed to a deficit of 1.07million oz during the year 2012. This is in comparison with a surplus of 1.19 million oz recorded in 2011. The supply shortages and the ever-growing demand for autocatalysts mainly in China and Japan resulted in the global palladium market slipping into deficit in 2012.

Supplies from Russian stocks fell during the year. Reports suggest that the Russian state stockpiles have dried up. The global supply constraints were a major contributor to the deficit witnessed in 2012. The supply of palladium during 2012 totaled to 6.55 million oz, falling convincingly by over 11%.

On the other hand, the gross demand for palladium was up 16% at 9.90 million oz. The category with the highest demand was the autocatalyst sector with an increase of 7.5%. The demand touched new highs of 6.62 million oz. The demand from China and Japan witnessed a huge surge on account of recovery in domestic markets.

The use of palladium in chip capacitors continued to witness weakness. The total industrial demand declined by 4% to 2.37 million oz during the year. This was the only sector that saw demand falling. Base metal alternatives like nickel and copper replaced palladium in electrical applications.

The supply from Russian stockpiles is anticipated to fall further during 2013. The mine output from Russia and South Africa-the two main producers of the metal, are also feared to remain subdued during the year. On the other hand, the auto sector demand for Palladium is forecast to rise during 2013. The rising demand and falling supplies will provide support for the metal prices. Analysts expect the Palladium prices remain range bound between $635 per oz and $830 per oz.