Platinum And Palladium...The Other Shiny Metals
Platinum is a valuable and precious metal. Platinum is used extensively for jewelry, but its main use is in catalytic converters for cars, trucks and buses. This accounts for about 50% of demand each year. Platinum is very effective at converting emissions from the vehicle’s engine into less harmful waste products.
Platinum is also used in the chemicals industry as a catalyst for the production of nitric acid, silicone and benzene. The electronics industry uses platinum as well for computer hard disks and thermocouples. Lastly, platinum is also is used to make optical fibres and LCDs, turbine blades, spark plugs, pacemakers and dental fillings.
Palladium is widely used in three-way catalytic converters in car exhaust systems. Palladium is also used jewelry and in dental fillings and crowns. Another common use for palladium is in multilayer ceramic capacitors. These are an important part of common electronics equipment such as cell phones, laptops, fax machines, etc. Palladium is also used in connector plating for a number of electronics.
Almost half the supply of palladium was used for the car industry due to tighter emission standards around the world, especially Europe. Palladium is used in catalytic converters to remove hydrocarbons, carbon monoxide, and other harmful gases from being emitted into the air.
The shine was already coming off China's auto sector. Then COVID-19 struck, buckling supply chains and hitting sales hard.
So both shiny metals, Platinum and Palladium are important metals to the auto industry. But because of COVID-19, the biggest market in the world, China saw car manufacturer profits fall move than 75% in the first quarter of this year. And just like Fed Powell, China has been through money at COVID-19 with subsidies and tax cuts in order to keep the auto industry in China from sinking too low.
Palladium jumped by the most since March amid renewed optimism about China’s economy reopening and planned stimulus for automakers, the biggest consumers of the metal. Palladium held above $2,000 an ounce, after gaining 6.7% as of 2:06 p.m. in London. It has dropped about a third since hitting a record in late February as the coronavirus pandemic dented automaker demand for the metal used in pollution control devices.
Sister metal platinum also advanced amid concerns over supplies from South Africa, the biggest producer. The market for platinum-group metals will remain tight this year as both demand and supply are hit by the pandemic, autocatalyst maker Johnson Matthey Plc said on Monday.
What you got going on is a great example of an imbalance between supply and demand? Supply and demand is the amount of a commodity, product, or service available and the desire of buyers for it, considered as factors regulating its price. But an imbalance between supply and demand, in the case of Palladium and Platinum is the scarcity of that commodity that is highly desirable by the automakers.
So where are price headed next for Palladium...price is breaking down, but momentum is up so look for a 1st target at $2200?
So where are price headed next for Platinum...price founds itself in weekly supply, so a pull back is very possible?
This post is my personal opinion. I’m not a financial advisor, this isn't financial advise. Do your own research before making investment decisions.