Palladium Prices Set to Narrow Premium Over Platinum in 2021
In a recent Reuters poll, analysts and traders predict that palladium prices, which have been soaring to record highs, will begin to slip in 2021, narrowing the significant premium it currently holds over platinum. Palladium, once the cheaper of the two metals, has seen a 400% increase in price since 2016 due to chronic under-supply, while platinum has struggled to rise from decade lows in an over-supplied market.
The current average price of palladium is more than twice that of platinum, but forecasts suggest that the gap will begin to close next year as platinum gains ground. Palladium prices are expected to average $2,000 this year and $1,700 next year, while platinum is forecasted to average $948 this year and $1,013 in 2021. These would mark the highest annual averages ever for both metals.
The palladium market is anticipated to be under-supplied by 883,000 ounces this year and 727,000 ounces in 2021, while platinum is expected to see an over-supply of 557,000 ounces in 2020 and 670,000 ounces in 2021. Some analysts believe that automakers may switch from using palladium to platinum to save costs, as the higher prices for emissions-cutting precious metals have cost the industry $18 billion in the past year.
Overall, the outlook for both metals remains uncertain, with factors such as industrial demand, supply disruptions, and economic uncertainty all playing a role in determining future prices. As the market dynamics continue to shift, investors and automakers will be closely monitoring developments in the precious metals sector.
