Palladium Market

Market Overview

Platinum group metals (PGMs) are rare precious metals with unique physical properties that are used in diverse industrial applications. Palladium, like gold, silver and platinum, is a precious metal, as well as one of the six PGMs, which also include platinum, rhodium, ruthenium, iridium and osmium.

The unique physical characteristics of PGMs include:

  • Strong catalytic properties;
  • Excellent conductivity and ductility;
  • High level of resistance to corrosion;
  • Strength and durability; and
  • A high melting point.

Palladium is primarily used as a thin coating on ceramic filters inside of catalytic converters in automobile engines. It acts as a catalyst to convert carbon monoxide to carbon dioxide and converts hydrocarbons and oxides of nitrogen into pure oxygen, nitrogen and water. Demand for palladium is expected to exceed supply over the next few years, driven primarily by the continued growth in automobile sales.

Supply

As a rare precious metal, there are very few palladium-producing regions worldwide and few known economically viable ore bodies.

Growth in mine supply is constrained, largely owing to:

  • Political, infrastructure and cost issues in South Africa;
  • Relatively constant palladium production in Russia; and
  • The very small number of new projects on the horizon in the near future.
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Demand

Demand for palladium continues to rise, driven primarily by the growing global automotive sector that consumes nearly 80% of the world’s supply. Palladium is a key component in catalytic converters in both gasoline-powered and hybrid vehicles, which help reduce toxic emissions to protect the environment.