"I expect palladium prices have room to increase further," Intesa Sanpaolo analyst Daniela Corsini said. "So far, (they) are justified by expectations of very strong growth in consumption by the automotive sector amid tighter emission standards scheduled to enter into force over the next years in Europe, China and emerging markets." The metal could face some choppy conditions, however, with some respondents saying prices are overdue a correction after surging to a record $1,138 an ounce this month.
That was accompanied by a rise in net long positions in Nymex palladium futures to all-time highs, potentially signalling that a correction is on the way. Next year palladium is expected to extend its record highs still further, to an average $1,050 an ounce. It is expected to maintain its historically unusual premium over sister metal platinum in 2018, before the ratio returns to more normal levels next year. Platinum, the worst performing of the major precious metals last year, is expected to average $980 an ounce in 2018, up 3 percent year on year. Its recovery will pick up speed the following year, with respondents returning an average 2019 forecast of $1,058 an ounce. Platinum, also an autocatalyst material, but one used predominantly in diesel cars, has suffered from the switch away from diesel since the Volkswagen scandal of 2015.