Palladium

Palladium Global Market Outlook

• The global demand for palladium is expected to grow at approx. 6–8 percent CAGR through 2020–2023

• The automotive and chemical sectors shall be the major growth drivers

• In 2020, Russia is expected to have accounted for the largest share of the world’s palladium production, holding nearly 44 percent of the global market share, followed by South Africa accounting for 29 percent of global production

Impact of COVID-19 on Palladium Industry

• Engaging in short-term contracts/partnerships with sourcing destinations, which are affected to a lesser degree, will help to alleviate a certain degree of uncertainty in the market.

• Suspension of operations in South Africa, due to COVID-19-led lockdowns, coupled with a slow ramp up of production, due to stringent safety measures, along with labor shortages, had led to loss of production between 10 percent and 40 percent in most of the mines in South Africa during the first nine months in 2020

• Russia and North America reported a marginal pandemic-related impact on the production in 2020

• The auto-catalyst segment, which was the most affected, continues to be affected due to semiconductor shortage. Production levels also declined, owing to shutdowns, production cuts, etc.

Global Palladium Market: Drivers and Constraints

Industry Drivers

• End Use Market: Increase in automotive output, especially gasoline vehicle, with more palladium loading, as countries across tighten emissions. Demand from the chemical industry shall witness robust growth, where palladium catalysts are used in bulk chemical process, like MEG and purified terephthalic acid (pTA) hydrogen peroxide (with large capacity additions in China) productions.

• High Prices: Current multi-year high prices are expected to incentivise supplier to maintain supply level stable and destock to benefit from high prices. The worlds largest palladium producer, Nornickel, has even announced contest for scientist to find new ways to use palladium.

Constraints

• EV: Growth in EV shall dent the demand for palladium, as no catalyst is required in EVs.

• Substitutions: In the electronics sector, nickel has widely replaced palladium used in electronic pastes in capacitor with palladium now being only used in niche application. Current high prices of palladium is also making automakers to look to some platinum based formulations to be used as catalysts.

• High Operation Costs & Over-reliance: Environmental concerns (high waste & tailings), high production costs are also a major constraints to development of new projects. The over reliance on South Africa & Russia for production exposes supply chain to disruptions.