During today's trading session, palladium has reached new historical high, reaching $1,412.5 per troy ounce on NYMEX (March futures). The metal has been on a continuous uptrend since August 2018. Its semi-annual growth was more than 70%. The previous maximum was recorded in 2001.
In the near future, there is an expected palladium deficit. According to an analytical report by Johnson Mattie, next year the demand for production will exceed almost 1 million ounces. Priority will be in the automotive industry, where it is used for gasoline engines.
There is a possibility of replacing palladium with a cheaper metal platinum in the production process. However, representatives of Norilsk Nickel are confident that this will happen only with a spread of $1000 between the two metals. Currently it is more than $600. Their deficit is forecast 1.3 million ounces, which is even more substantial.
What is the reason for this exponential growth? Whether price collusion or market manipulation, it’s not really important. What is important is that we have seen similar charts, an example is cryptocurrency. And we know that aggressive growth will be followed by an equally aggressive fall. In the case of palladium from a peak of $1090 (in 2001), it fell to $145 (in 2003).