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According to the fundamental principles of economics, lower supply and higher demand creates shortages, which in turn induces price hikes. Palladium, once an economic alternative to platinum, is highly sought after in the transportation and petroleum industries. Due to the metal's popularity, prices have recently surged. Palladium was previously bought cheaply as compared to the other metals. However, its high demand and lack of adequate supply have led to the prices skyrocketing.
However, before we begin we should briefly discuss what exactly palladium is. It is greyish coloured metal, which is manufactured alongside platinum. Today, it is worth considerably more than gold. Most palladium production comes from Russia. Its scarcity of supply is the main reason behind its high value. When palladium was more affordable (trading at around $600-$800/ ounce), it was more affordable than platinum, and used as a cheaper platinum alternative, particularly for car manufacturers. However, demand for palladium has changed. In particular, palladium appears to be more effective than platinum in reducing emissions when used in a catalytic converter. Therefore, it is being purchased in greater quantities by car manufacturers in order to meet emissions standards and regulations on new cars. The price of this precious and rare metal is anticipated to continue to increase in near future.
From $150 per ounce to over $3000/oz, palladium has become a new star in various industrial realms. Palladium, a byproduct of nickel and platinum, is now regularly sought after by investors to add to investment portfolios. But what has triggered this rise in demand? The world is more invested in caring about the climate, and palladium is a safer and cleaner alternative. Thus, many industries have started using it in the production of major products.
The Palladium deficiency caused by the Norilsk mine floods seriously disrupted the industry. The car business was hit, as it utilizes around 80% of the complete palladium supply. Palladium's demand is greater than its supply, which was further reduced due to the floods. Because of the decrease in supply, the costs of palladium rose. Given current demand levels, it is apparent that palladium mining firms need to look for ways to increase the supply of this rare metal.
As per some sources, this deficit in supply has been casting a positive impact on the value and profitability of palladium and the miners are greatly benefiting from this low supply. The situation is seen to be worsening as the firms are looking to restore the metal, but lack of availability is making the situation worse for businesses. A 17% price hike has already occured in 2021, and the scope of the prices is seen to be following an ascending trend. This is certainly a great factor for the palladium miners and an opportunity for them to earn higher profits.