Norilsk Nickel warns palladium market is in a bubble

By Daniel Brightmore
The world’s biggest producer of palladium, Norilsk Nickel, says financial speculators have created a bubble that’s bad for the industry. Nornickel...

The world’s biggest producer of palladium, Norilsk Nickel, says financial speculators have created a bubble that’s bad for the industry.

Nornickel is planning to take steps to ease market tightness by shifting sales to more investment-grade bars, instead of the powdered form used by industrial consumers, according to Anton Berlin, head of analysis and market development. He declined to provide exact figures of how many bars would be produced, reports Reuters.

“The market has formed the bubble,” Berlin said in an interview in Moscow. “Underlying industrial demand is not evolving as quickly as the price move seems to indicate.”

Palladium prices have shot up 19% in 2020, fuelled by speculation that mining companies won’t be able to increase supply at a time when demand for cleaner cars is increasing. The metal is a key part of autocatalysts, which filter toxic fumes, and is also valued by precious-metals investors. The price fell about 0.5% on Wednesday to $2,273 per ounce.

SEE ALSO

World Gold Council confirms gold still a mainstream investment choice

How Dundee Precious Metals continues to grow through operational excellence and digitalisation

Global lithium demand “shows no sign of slowing”

Read the latest issue of Mining Global here

“Powdered palladium is Nornickel’s main product, but the material isn’t used by financial investors, where demand for the metal has been strongest. By shifting its production mix to more bars and less powder, the company hopes it can ease the volatility in the market.

“A lack of ingots leads to higher lease ratinveses, large backwardations and market turbulence,” Berlin said.

Nornickel will sell the ingots to its usual customers, who can use the metal in financial transactions, such as collateral for bank financing, Berlin said.

The record prices for palladium has revived concerns that users will start finding cheaper alternatives and encourage a switch to other metals, like platinum. Still, there’s no sign that’s happening yet because carmakers are more focused on meeting emissions targets and making electric cars, Berlin said.

The mining company will also deliver three tonnes of ingots from its palladium fund to provide short-term relief to the market, Berlin said.

Share

Featured Articles

Laws Thwart US Bid to Match China on Lithium Mining

US bid to increase domestic production of lithium in order to reduce reliance on Chinese supplies of critical mineral frustrated by 'confusing' state laws

Bain: 'Inflation Dampening Mining Leaders' Net Zero Hopes'

Bain & Company’s annual Energy & Natural Resource Executive Survey shows 62% of energy execs say high costs mean net zero goals won't be met by 2060

Focus on: Lithium – ‘White Gold’ Driving the EV Revolution

Because of the move to electric vehicles, the metal lithium is rapidly becoming a vitally important part of world’s bid to move away from fossil fuels

Aluminium Industry Calls for new North America Body

Supply Chain & Operations

Data-Driven ABB Smart Hoisting Solution 'is Safety Boon'

Digital Mining

Deep Sea EV Metals Mining Firm in Greenpeace Clash

Sustainability