RE: SLP17 Jan 2019 13:18
Impressive isn't it, why? Anyone's guess right now but Sibanye is having strike problems I believe.
Real change in the industry needed to adopt platinum and even out the imbalance but that's a long way off still so I expect the spread to grow. There isn't much in the news recently to suggest industry buyers are going to switch to platinum. Shorts closing could be the cause for the momentum we've seen this week so perhaps we will push on to $1500 before meeting resistance.
Why Rhodium has gone to sleep I couldn't say but then it's still a good deal higher than where it sat this time last year. I don't think palladium is likely to follow similarly in terms of topping out and going to sleep as the demand fundamentals are so different now. In the decade following 1998 Rhodium rose 4000% before carmakers found ways to use less.
“Congressional pushback on efforts to ease U.S. sanctions against Russian metals producers, the world’s top source for palladium, have probably helped drive supply shortage worries,” said Ilya Spivak, senior currency strategist with DailyFx. Many members of Congress have been questioning the U.S. Treasury Department’s decision in December to ease sanctions imposed in April on certain Russian companies.
The precious metal, primarily used in the auto industry for catalytic converters, has surged more than 65 percent since the middle of August. The bull run has been driven by an acute shortage of immediate supply as car manufacturers scramble to get hold of the metal to meet more stringent emission controls.
“Investors appear to be ignoring the fact that weak sales figures have been reported for all major auto markets in recent days,” said Commerzbank analysts including Daniel Briesemann. “Instead, they are seeing news such as the planned widening of a strike to include the platinum mines of a major South African gold and platinum producer as being a good reason to buy.”
George Gero, managing director at RBC Wealth Management, noted high demand from "the automobile industry using more and more of palladium" and lower supply were pushing prices higher.
The move higher on Wednesday could also be attributed to short covering, Michael Matousek, head trader at U.S. Global Investors, said.
A sustained period of record palladium automotive demand, with last year's estimate of 8.5 million ounces, coupled with constrained mine production growth has resulted in demand outpacing supply over much of this decade, Metals Focus said in a note dated Tuesday.
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