Palladium prices dropped 15% this month, hitting a two-year low. Sources cite weak automotive demand in the U.S. and China – the automotive market accounts for 70% of annual consumption, used in catalytic converters. Mining has increased under the influence of a strong U.S. dollar, while demand has shrunk – this year’s demand is only expected to be about 3 tons above production. 1
Investors are questioning whether demand for the metal, which is used to scrub emissions from gasoline engines, will be strong enough to sustain current prices.” 2
In the low-end vehicle market, investors are discovering an excess of recycled palladium, recovered from donated and junked cars. For the past three years, recycled palladium has accounted for more than 30% of the supply. That trend is expected to continue as automotive scrap companies grow more efficient in a tough market. 3
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