Palladium Prices Explained

A stronger U.S. dollar and a potential market surplus in 2024 made palladium prices drop to around $900 per ounce. Will this southward trend continue? Check the commodity’s top price determiners.

Why are palladium prices fluctuating?

1. Geopolitical Events

Geopolitical events such as war and armed conflicts, economic sanctions, and trade wars greatly shape commodity prices.

For instance, palladium comes from Russia and South Africa. These two countries are the world’s largest palladium sources. Statista’s global production record showed that Russia accounted for 88 metric tons followed closely by South Africa with 80 metric tons.

Thus, these combined productions contribute approximately 80% of palladium used worldwide. However, these countries constantly battle geopolitical events.

South Africa’s worsening massive power blackouts and frequent strikes from mine workers threaten its platinum and palladium supplies.

Additionally, sanctions from the West made Russian commodities limited access to the European and North American markets. Thus, this fuels the volatility of palladium prices.

2. Technological Advancement

Palladium application is crucial in various new technologies such as electric vehicles and fuel cells. The automotive industry alone consumes around 80% of the roughly 10 million ounces of palladium used yearly.

Furthermore, with the increasing sustainable practice in the industry, automakers top the most palladium consumers as this metal is a good agent in reducing harmful emissions from vehicle exhaust. Thus, a healthy automotive industry with advanced technological applications drives palladium prices up.

3. Investor Demand 

Apart from gold and silver, palladium is also a haven asset. When investors see global economic uncertainty, they turn to metal investments such as palladium as a way to protect their wealth.

Thus, the investor’s demand due to the global economic uncertainty and volatility tends to influence palladium prices.

Which variables impact the price of palladium?

• Geopolitical Events
• Technological Advancement
• Investor Demand
• Supply and Demand
• Speculative Trading

Where does palladium come from?

Palladium is a silvery-white, ductile, and malleable metal with the chemical symbol Pd. It is a member of the platinum group metals (PGMs). William Hyde Wollaston, an English chemist and physicist, discovered palladium in 1803.

While analyzing samples of mined platinum ore from South America, he noticed that a small amount of the ore did not dissolve in aqua regia (a mixture of nitric acid and hydrochloric acid). He named the new metal palladium, after the newly discovered asteroid Pallas.

Its first trading activity took place in London in 1805. Initially, palladium’s price was very high but it declined after the discovery of other precious metals.

Palladium extraction from ores includes various processes. These are hydrometallurgy, pyrometallurgy, and electrometallurgy:

1. Hydrometallurgy – This involves crushing and treating the ore with an acid solution or base. This process dissolves the palladium and other PGMs, and the solution is then treated to precipitate the palladium.

2. Pyrometallurgy – This process involves roasting and converting palladium and other PGMs into oxides. To reduce oxides into metals, they are heated in a furnace with carbon.

3. Electrometallurgy – This method requires dissolving the ore in a solution of acid or base. The solution is then electrolyzed and the palladium is deposited into a cathode.

What are the uses of palladium?

Palladium has a wide variety of applications. This includes:

1. Catalytic Converters in Automobiles – Auto makers use palladium as catalytic converters in automobiles to convert harmful exhaust gas into less harmful substances.

2. Jewelry – Due to its hypoallergenic and tarnish-proof properties, palladium is a popular metal application in the jewelry industry.

3. Electronics – The electronics industry is another palladium consumer as this metal is good for making capacitors, sensors, and printed circuit boards.

4. Medical Devices – The medical industry uses palladium in making pacemakers and heart valves. Additionally, this metal is an active ingredient in dental fillings and crowns.

Apart from the listed major applications above, palladium has an important role in other industrial applications such as fuel cells, chemical catalysts, and water purification systems.

Now, this rare and non-renewable resource metal comes from the top country producers such as Russia, South Africa, Canada, the United States, and Zimbabwe.

What is the future price of palladium?

While supply and demand, geopolitical events, technological advancements, and global economic conditions are the top anchors of palladium prices, emerging trends such as hydrogen renewable applications can potentially hold its prices in the future. 

Furthermore, palladium’s role in a groundbreaking shift from a fossil fuel-based economy to a hydrogen-based economy will be a game changer in its future supply, demand, and prices as palladium can turn hydrogen into a powerful and sustainable fuel source. 

Thus, Coin Price Forecast experts see a +49% bullish market for palladium in 2030 bearing the price of $6,292 per troy ounce. This of course is subject to the current and future trends with greater possibility of changes.