That would be its seventh year in deficit, according to Metals Focus data. "Palladium's fundamentals in contrast (to platinum) remain in rude health, with consecutive increases in autocatalyst demand having driven total offtake from 272 tonnes in 2010 to over 327 tonnes last year," it said. "Even with the lacklustre performance of both the Chinese and US auto markets, automotive palladium demand will almost certainly rise again this year, the result of growth in Europe and elsewhere, as well as tightening emissions legislation driving increases in PGM loadings."
That has led the group to predict an average price of $1,030 an ounce for palladium this year, up 19 percent from 2017. Palladium was last year's star performer among precious metals, rising 56 percent and hitting a record $1,138 in January. Platinum's market surplus is seen at 40,000 ounces this year, down from 69,000 ounces in 2017. Mine output is expected to ease 1 percent to 6.053 million ounces, with a drop in recycling feeding into an overall supply drop of 2 percent.
However that will be outstripped by a 3 percent drop in automotive demand as consumers continue to move away from platinum-heavy diesel cars, it said. Physical investment, which fell by half last year, is expected to decline by another 7 percent this year, while jewellery demand, the second largest segment of consumption after automotive buying, is seen as flat.
"Global demand appears lacklustre and we have yet to see the full effects of the fallout from accelerating losses in the light-duty diesel sector," Metals Focus said. Platinum prices will eke out some gains this year, led by a recovery in gold as the dollar retreats and stock markets correct, it said. However, at $980 an ounce, its price forecast is well below that of palladium.