Palladium maintains steady support

Not as volatile in the marketplace or as expensive as its sister- metal platinum, palladium nevertheless has achieved a following which is keeping its supply more or less in balance with demand.

Tending this year to ride on the coattails of platinum, the precious metal palladium has traded within a fairly narrow price range, $113- $135(US) per oz, and of late has found itself in the $120-$130 range. To the end of August, the metal’s price averaged $124. For all of 1987 the metal averaged $131.40, while two years ago it averaged $117.

Not too exciting. However, Johnson Matthey, in a recent interim report on platinum group metals, says “palladium has been the steadiest of the precious metals, holding up comparatively well when under pressure at the beginning of the year and again in September. Strong consumer demand has provided consistent support for the price.

“On the other hand, once the squeeze on physical metal that developed on NYMEX (New York Mercantile Exchange) in February was over, the market seems, despite occasional shortages, to have been adequately supplied. This has tended to restrict upward movements, aided and abetted by Soviet offers which, although infrequent up to now, have always been into a rising market and have had their usual inhibiting effect.” Supply/demand factor

Total supply of palladium in 1987 is calculated by Johnson Matthey to have been 3.16 million oz, with demand that year amounting to 3.21 million oz. Total supply this year is expected to reach 3.32 million oz, with demand hitting 3.35 million oz.

Main source of new supply of the metal, Johnson Matthey says, is the Stillwater project in Montana, which is producing three times more palladium than platinum.

The major industrial application for palladium is in the electrical- electronics field, with most of the growth occurring in Japan. In particular, demand for palladium- bearing thick film pastes used in electronics circuitry and components is increasing. Other applications for palladium include in dentistry and in the jewelry sector.

Use of palladium in the manufacture of autocatalysts is slowly declining, Johnson Matthey reports. “The reduction is most visible in the United States and Japan, where palladium-bearing catalysts are still losing ground to platinum- rhodium 3-way systems. In both regions, palladium consumption has held up better than expected,” writes the company’s researchers.

In the same interim report, Johnson Matthey forecasts a 10% growth in demand for platinum in 1988, but only a 2.3% boost in primary supply. The report predicts over-all demand for platinum this year will reach 3.64 million oz, more than 300,000 oz above the 1987 record total and about 465,000 oz greater than the 1988 supply.

Helping to stimulate the demand for platinum this year, in the small investment products sector (under 10 oz), are two major issues (by Canada and Australia) of platinum coins. Johnson Matthey expects small investment products will account for 360,000 oz this year, an increase of 67% from last year.

In Canada, the new .9995 Maple Leaf platinum coin (along with a new Maple Leaf silver coin) was recently placed on sale by the Royal Canadian Mint. Target for the Mint for the platinum coins is at least 100,000 oz during the first year of sales.

The Australian Koala platinum coin first went on sale in August and, according to reports, is selling extremely well. Johnson Matthey reports the Australian government is hoping sales of the coin will stimulate domestic exploration for the precious metal, current production there of platinum being negligible.