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The experts at Metal Focus predict the palladium market may remain in deficit in the year, and it is expected to post a severe deficit in the year of up to 25.5 tonnes where the sister metal platinum was in surplus and its supplies continues to increase to 9.7 million ounces at the end of the year, which may result in the reversal of the price movement of the two metals.
The demand for the metals is highest in the automobile sector where palladium is used in gasoline-powered cars and the price forecast has been made up to 45 percent y-o-y to an average of $1490 in the current year,
mainly, due to growing demand in the autocatalyst markets (at the rate of 3.6 percent) caused by the tighter emission standards, which requires the gasoline-powered vehicle to meet the emission targets in Europe.
In the case of sister metal platinum, the higher emission standards for vehicles led to growth in demand, further net supply disruption caused by African mines, and the stricter emission rules in India and China are expected to boost the price.
The supply risks created by a disruption in the mines from Africa have been a risk, in conditions where the demand is growing but the metal recycling supplies have increased and its overall supplies in the market continue to grow.
There are demands from other areas like the jewelry market but it is now at 5 percent below the 2018 levels and one of the weakest in the last 6 years.
In 2008, its price was at $2,308 where analysts predicted it to be more precious in comparison to the yellow metal, and in 2012, the value was at $1,550 an ounce, almost 83 percent above the current levels,
But the fundamentals for the metal is expected to deteriorate in the current year, where its demand declined due to the diesel scandal, the switch to gasoline vehicle, and certain cheating cases related to the use of metals in the emission reduction.
Some analysts believe in the next two years the metal will continue to offer buying opportunities, and the Reuter poll suggests the predicted average of the price will be at $865 in 2019 and $925 in the next year.
It is suitable for the longer term where the rise in the price of the yellow metal may pull it up. Further, there are other factors which may revive its demand.
It has higher density and higher melting points which make it best suitable for industrial applications, and the current price offers inexpensive rates to hold such a metal.
Many assume this to be the best time to invest as it is trading near lows, although, it has great industrial uses and limited reserves.
It's the market price is either close to, or below the production cost. Many producers have to cut production due to increasing costs and the current output of the mines is not above 250 metric tonnes, on the contrary, gold is produced over 3000 tons a year.
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