What is Palladium?
Palladium is a lustrous silvery-white metal discovered in 1803 by William Hyde Wollaston. It is part of the platinum group metals and it is known for its unique properties such as excellent corrosion resistance, high melting point, and ability to absorb a vast amount of hydrogen at room temperature.
Uses of Palladium
Palladium has a wide range of applications due to its unique properties. The largest use of palladium is in the automotive industry as an essential component of catalytic converters, which help reduce harmful emissions from vehicles. It is also used in electronics, dentistry, medicine, hydrogen purification, chemical applications, and groundwater treatment. In recent years, palladium has also been increasingly used in jewelry due to its durability and tarnish resistance.
The Rise of Palladium
The rise of palladium can be attributed to several factors. One of the main drivers is the increasing demand from the automotive industry, particularly for petrol and hybrid vehicles, which use more palladium in their catalytic converters compared to diesel vehicles. Additionally, tightening emission regulations worldwide have led to an increase in the amount of palladium used per vehicle.
Moreover, supply constraints have also contributed to the rise of palladium. Most of the world’s palladium supply comes from Russia and South Africa. Political instability, labor issues, and power supply problems in these regions have led to supply disruptions, pushing up the price of palladium.
Analyzing its Growing Demand
The demand for palladium has been on a steady rise over the past decade. The automotive industry, which accounts for about 85% of the total palladium demand, has been the main driver of this growth. As countries around the world tighten their emission standards, the demand for palladium, a key component in emission control devices, is expected to continue to rise.
Furthermore, the demand for palladium in the electronics industry is also growing. Palladium is used in a variety of electronic components including multilayer ceramic capacitors (MLCC), which are used in smartphones, computers, and automotive electronics.
Analyzing its Price Trends
Palladium prices have seen a significant increase over the past few years, and reached an all time record of $3000 per ounce by the end of 2021. Prices dropped dramatically since that high record, probably influenced by the massive growth of electric car production (which do not need catalytic converters). As of July 25, 2023, the price of palladium stands at around $1,320 per ounce, a price similar to the price levels of 2019 and seems to fit demand and supply constraints mentioned earlier. As long as these conditions persist, the price of palladium can be attributed to the growth, and expected to remain high.