Financial News Agency, June 22 (Editor Shi Zhengcheng) Last night and this morning, spot palladium prices first experienced a bizarre surge of more than 10%, and then suddenly gave up most of the gains. Analysis pointed out that the wide intraday fluctuations may be related to the short covering behavior of traders.
According to quotations, spot palladium opened at US$927.81 per ounce on Friday, reaching a maximum of US$1,029.46 per ounce during the day, and then fell back to around US$950 per ounce.. Just this Tuesday, the price of palladium fell to a new low of $867 per ounce in nearly four months.
(spot palladium time-sharing chart)
As the background of the entire trading logic, palladium demand is mainly concentrated in the traditional automotive industry, used to produce catalytic converters that filter exhaust gases. Oversupply of this metal is compounded by the rise of electric cars - cars that emit no emissions at all. The price of palladium hit $3,000 per ounce in early 2022 and has continued to weaken ever since.
The supply and demand relationship and the demand outlook are not optimistic, which has also caused palladium to become a highly concentrated target of short sellers in the market. According to data from the CFTC, net short bets on palladium futures reached their highest level since December 2009 during the week of June 11 this year.
Regarding the rapid rise of palladium in recent days, analysts believe that the main disturbance is caused by short-term trading factors.
Bart Melek, global head of global commodity strategy at TD Securities in Canada, said that funds may be being forced to cover shorts as automakers are replenishing the metal, so short-term buying can be seen.
Tai Wong, an independent metal trader in New York, also pointed out that there have been some relatively large purchases of palladium ETFs recently, resulting in short-term physical shortages and spot premiums . This situation has caused some chaos in the already weak futures and spot markets, causing a lot of volatility and short-term arbitrage, and this situation may continue for a few more days.
According to industry sources, London is currently the commodity trading center with the highest supply pressure in terms of physical supply of palladium.
The main producing areas of global palladium include South Africa, Russia and North America. The Platinum and Palladium Industry Association in London ordered in 2022 to ban newly produced platinum and palladium from Russia from entering the London market for trading. when the ban was issued. Russia's Nornickel produces 25-30% of the world's palladium supply.
In the long term, although the recovery in demand for hybrid vehicles may provide benefits to palladium prices, in the final analysis, the supply and demand structure problem still needs to be solved . Paul Dunne, CEO of South Africa's Northam Platinum, said at the end of May that prices would not recover unless the mining industry further cut supply.
paul emphasized: “We need to see real structural changes on the palladium supply side to re-establish pricing power in the market. This will obviously bring some pain, but I think it is necessary. At the current price level, the mine Neither merchants nor refiners can make money."
(Financial Associated Press Shi Zhengcheng)
