Looking at the recent situation on the palladium market, almost no one expected such a drastic sell-off which took place at the beginning of the year. Earlier most negative forecasts assumed the price to average around $1,500 per ounce and these price levels were touched at the beginning of the year.
What awaits us in 2023 from the fundamental side?
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Create account Try a demo Download mobile app Download mobile app- 2022 was weak in terms of demand from the automotive sector. Demand has stopped growing and may decrease in 2023
- More and more manufacturers are focusing on production of electric cars. Meanwhile platinum is more widely used in production of gasoline engines, while palladium usage is decreasing
- Higher supply is expected in 2023, mainly due to relatively high prices and some analysts expect that palladium market may be balanced
- The year 2022 brought one of the smaller deficits
Looking at the crisis from the early 2000's and fluctuation of palladium and platinum prices, one can assume that a similar situation may occur in the near future. In this case, the price of palladium and platinum may be equal. Platinum popularity is rising, but most likely the maximum growth level for this metal is located around $1,300 per ounce, which would determine the decline of palladium prices to this level anyway. However, a stabilization of platinum prices and a further decline in palladium prices below the level of USD 1,000 per ounce cannot be ruled out.
Palladium to platinum price ratio. Local high was reached in the 2000-2001 period, after which the ratio fell sharply below 1.0 and reached local lows in 2003-2005. At present, it can be expected that this ratio should also fall even to 0.5, if the transformation of car manufacturers accelerates further. Source: Bloomberg
In recent months platinum moved higher, contrary to palladium prices. Currently, sentiment towards the whole precious metals market is rather negative and even massive dollar weakness may not spark a rebound without significant change of fundamentals. Source: xStation5
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