Curbing car emissions has made palladium the most precious of metals

Russia’s Norilsk Nickel is the world’s largest producer of palladium.
Russia’s Norilsk Nickel is the world’s largest producer of palladium.
Image: Reuters/Ilya Naymushin
We may earn a commission from links on this page.

Forget gold and platinum, because the shiny metal catching the eye of traders is palladium. The price of palladium surpassed $1,000 per troy ounce for the first time in 16 years in trading today.

As countries vow to slow, and eventually stop, the sale of gasoline- and diesel-burning cars, palladium is benefiting from the same surge in investor interest that has pushed up the price of metals used to make lithium-ion batteries in electric cars, such as cobalt and lithium.

Palladium is used in catalytic convertors that convert the harmful gases in car exhaust into less toxic substances. So before electric cars sweep across the world’s roads, the metal is in high demand as car manufacturers look for other ways to cut the emissions from their fleets. The price of palladium, which is mostly mined in South Africa and Russia, has surged almost 50% this year as investors bet that the market is heading for a shortage in supply.

Speculative bets on palladium’s rise have almost tripled in the past six months, according to the Financial Times (paywall). Last month, the price per ounce of palladium rose above platinum for the first time in 16 years. This might encourage the manufacturers of catalytic convertors to find ways to switch to using platinum in catalytic converters, which is likely to remain cheaper in the near future.

Analysts at JPMorgan forecast the price of platinum to fall to $930 per troy ounce by the end of the year and to $910 by the end of the first quarter of 2018. At the time of writing, the price was about $945 per ounce.