Fri, December 01, 2023

Palladium drops after gaining on Russian supply risks


On Tuesday, palladium prices pared their previous gains after the suspension of two state-owned Russian refiners in London.

Futures tied to the precious metal for June delivery slashed 3.79% or 91.53 points to $2,325.77 per troy ounce. It reversed its Friday climb of 1.65% to $2,463.00 per share.

Similarly, spot palladium ticked 3.60% or 87.49 points lower to $2,344.68 per troy ounce. It traded negatively from a surge of 8.59% to $2,425.70 per troy ounce last week.

The previous upturn came after the London Platinum & Palladium Market suspended the Krastsvetmet and Prioksky Plant of Non-Ferrous Metals. This decision will block Russian refiners from British traders’ goods-delivery and sponge-accreditation lists.

Accordingly, Moscow will lose access to the metals’ biggest trade hub because of its persisting conflict in Ukraine.

This latest announcement reverses the previous decision of the center a month ago, whereas it let the Russian plants continue their operations in the country.

Similarly, Chicago Mercantile Exchange (CME) halted the approved status for warranting and delivering certain Kremlin platinum and palladium brands.

Correspondingly, analysts highly anticipated a near-term impact on spot liquidity as the two exchanges represent large trading markets. Moreover, the suspended refiners are material suppliers in the industry.

Then, the Japan Exchange Group mentioned that the Osaka Exchange is considering revoking Russia’s delivery designation for platinum and palladium.

The possible postponement could trigger a sharp decline in the open interest of the contracts and liquidity.

Palladium, used in car exhausts as an autocatalyst, was already under significant pressure amid the strong vehicle sector demand. The escalating Moscow-Kyiv war also fueled inventory concerns.

Consequently, the latest suspension of Russian refiner output will further prompt market worries, fuelling more price hikes.

Palladium down, Gold in choppy trading

Meanwhile, bullion futures for June 22 slightly rose 0.35% or 6.80 points to $1,955.00 per troy ounce. It extended a jump of 0.13% to $1,948.20 per troy ounce yesterday.

Then, the spot gold inched up 0.07% or 1.26 points to $1,955.05 per troy ounce. The prices of the premium yellow metal were choppy as investors braced for likely hot US inflation data.

The awaited economic indicator would consolidate bets of aggressive measures from the Federal Reserve to counter mounting pricing pressures.

Conversely, platinum contracts for July 22 move similarly to the palladium. The precious metal shed 1.36% or 13.25 points to $964.55 per troy ounce.


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