What's going on with Palladium Today?

DotStore

I collected the first two Palladium coins, and was planning to get the 2019 version also.

Just wondering if anyone knows what's causing its market movement today (downside)?

topstuf

Quite possibly because palladium is money ...NOWHERE!
NCLT, maybe but nowhere else.

RogerB

A sop to a Montana palladium mine owner when there is very limited commercial use (or value).

Tomthecoinguy

I never give out financial advice, so don't take anything I say as such.

But, I can throw out guesses just like anyone else. I think the concenssous for the drop today, is the trade tariffs with China could hurt auto sales, since 80% to 90% of palladium is used in cars, the price took a hit.

Another theory might be that Palladium is a relatively thinly traded commodity, that is subject to manipulation. The above was just an excuse to take it down. This is not far fetched, as it has happened in other PM markets.

If memory serves a few years back there were memos from silver traders saying, when x report comes out we are taking down the price no matter what the report says. We will use the report as an excuse.

jmlanzaf

It was simply overbought. Coupled with a strong dollar, it was due to correct.

dcarr

I sold yesterday

Tomthecoinguy

@dcarr said:
I sold yesterday

Nice!

thefinn

As B.B. King says, "The thrill is gone."

MilesWaits

Sh*t happens.

Paradisefound

Could not wait for the upcoming opening drama ....... at least a 15 pgs episodes post
I think it's really pretty though .....

coinpalice

platinum was over 2,000 per ounce one time, look at it now. I think palladium will have the same downside over time

Goldminers

It reacted to a car related Trump tariff tweet tantrum

Cameonut

Could be that Russia needs an infusion of cash so they sold off some Pd. The charts I found listed no sales volume.

Most people don't understand thinly traded metals markets (including @Goldminers). Most businesses that need Pd set up long term contracts with fixed pricing to insure supply without major volatility.

Goldminers

Car sales have been slowing recently and dealers have excess inventory, per car company stock forecasts updated for month end July 31st. Palladium’s demand is hugely dependent as the key catalytic element for exhaust emission control in gasoline engines and thus the automobile sector is the main use which new sales are declining globally at the moment, especially in China. Trump did threaten tariffs on European cars which would cut their sales dramatically.

So car sales and palladium demand are down, and to make a perfect storm, at the same time a major supply increase announced by Russia's largest palladium mine.

https://www.kitco.com/news/2019-07-31/-Norilsk-Ups-Palladium-Production-By-10-Nickel-By-6.html

And yes, as mentioned above, if you are a car producer or catalytic converter builder and you have a lot of Pd futures contracts, and you see sales drop, you can take some profits on some of your winning hedges in hopes of buying them back at a lower price.

Add to this the USD at a new high since much of the world has negative interest rates. And...BMW major announcement that second-quarter earnings fell 20%, hit by the rising cost of manufacturing electric and hybrid cars to help the carmaker meet stricter emissions limits. So due to Europe laws, they have to reduce gas engine cars, so less Pd demand.

Plenty of reasons for the price to drop sharply after a large increase, and adjust to the new information.

Edited to add that the long term price chart for palladium also hit a classic double top, so buyer beware.

Cameonut

None of the car companies that I know of buy Pd on the spot market. They ALL have long term contracts with the mines to insure supply SO THEY CAN BUILD CARS. They do not deal at all in the spot market.

I used to build and recycle catalytic converters for one of the largest car companies in the world (think millions). The ONLY reason why the price might drop 10% is that if one of them publicized that they could meet emissions standards without using as much Pd. I know of no such announcements.

Goldminers

@Cameonut said:
None of the car companies that I know of buy Pd on the spot market. They ALL have long term contracts with the mines to insure supply SO THEY CAN BUILD CARS. They do not deal at all in the spot market.

I used to build and recycle catalytic converters for one of the largest car companies in the world (think millions). The ONLY reason why the price might drop 10% is that if one of them publicized that they could meet emissions standards without using as much Pd. I know of no such announcements.

Agree, some car companies and/or their cat converter manufacturer suppliers have long term Pd commodity futures contracts. I never said they deal with spot pricing. But spot pricing is impacted by futures trading, so there is a link.

I do not see any evidence that ALL car companies have long term direct contracts with mines like Norilsk in Russia or South Africa for Pd. Do you have proof of that statement? Most major mining companies actually avoid too much hedging or locking in prices, so they can take advantage of metal price increases.

If the ONLY reason the price could drop 10%, is that they publicized they can meet standards w/o as much Pd, and the price dropped 10%, and you know of no such announcements, then it didn't happen, or there were other reasons like I mentioned.

Goldminers

I recommend a truce, as I agree with your original premise that most people don't fully understand the metals markets or they would not be on this forum.

Found this Victorian ring on an internet image site and just could not resist.

jmlanzaf

@Cameonut said:
None of the car companies that I know of buy Pd on the spot market. They ALL have long term contracts with the mines to insure supply SO THEY CAN BUILD CARS. They do not deal at all in the spot market.

I used to build and recycle catalytic converters for one of the largest car companies in the world (think millions). The ONLY reason why the price might drop 10% is that if one of them publicized that they could meet emissions standards without using as much Pd. I know of no such announcements.

But people playing in the markets are basing their positions on perceived demand. A market perception of decreased auto demand will drive the market further and faster than any real purchasing changes.

Look at the way oil prices have tanked despite DECLINING current inventories.

scubafuel

I’m pretty sure nobody but speculators cares about the spot market for palladium. When you have a market of speculators, a 10% daily move is not really surprising.

Cameonut

A truce is fine Goldminers - but lets feel free to debate.
With respect to long term contracts, I believe all the large car companies have long term contracts with the mines. What they want is to remove the middle man. As we know, everyone who touches metals takes a cut. Of course I do not have proof of that statement as those contracts are always confidential.

There is another route that car companies can take to insure supply. They can contract with the catalyst coaters who will then contract with the mines. These are companies like Degussa, Johnson Matthey, Umicore, and the like. I don't think that car companies like to employ this method because that tends to lock them in to a particular supplier and they like multiple sources.

I remember about 20 years ago, we needed to renegotiate our Platinum and Rhodium contracts. We were working on some new coating technologies on metal substrates (instead of the typical ceramic honeycomb from Corning or NGK). These technologies used more Pd and relatively less Pt and Rh - we were successful in keeping the lid on price increases for Pt with the mere threat of an alternative technology. This kind of stuff never hits the newspapers, but is all part of the game.

These games are why I do not speculate in precious metals. The more I learned, the more I realized that I didn't know everything and probably never would. There is enough risk in the market from known forces, much less the games being played.

Goldminers

Cameonut, Yes the precious metal market games are very risky to play. However I still trade leveraged precious metals hourly/almost daily as a money making hobby after retiring from mining for 40+ years. Critical to have stops ready to implement and don't trade overnight in most cases.

I sure don't know corporate car company details, but I understand trading sentiment and momentum enough to make money speculating in metals in spite of my lack of knowledge.

It is my metal commodity trading profits that I use to fund my coin/medal collecting hobby. However, the fact that I still collect modern precious metal coins proves I don't know what I am doing.

As I have said before, I think palladium price will eventually fall due to more hybrids and electric vehicles being mandated and mining Pd production increases in Russia. Platinum will stabilize or rise due to new green hydrogen fuel cell tech and the civil unrest and inflation reducing economic mining production in South Africa.

lkenefic

@RogerB said:
A sop to a Montana palladium mine owner when there is very limited commercial use (or value).

Palladium is the catalyst for the oxidative recovery of emissions from car exhaust. It's what makes a catalytic converter work.

7Jaguars

However platinum does the same and better for a lower price currently....

dcarr

@7Jaguars said:
However platinum does the same and better for a lower price currently....

Not necessarily.

Pure solid Palladium is currently $538 per cubic centimeter.
Pure solid Platinum is currently $584 per cubic centimeter.

jmlanzaf

@dcarr said:

@7Jaguars said:
However platinum does the same and better for a lower price currently....

Not necessarily.

Pure solid Palladium is currently $538 per cubic centimeter.
Pure solid Platinum is currently $584 per cubic centimeter.

Yes. Platinum has a very high density

7Jaguars

Uhh, per ounce fellas....

RogerB

Catalytic converters are recycled at a very high percentage - especially for a consumer product. This places a floor on availability and limits the need for new metal. Further tinning of new metal market creates a highly speculative situation where authentic users have locked in their expenses for several years, and the rest is sold to phone "customers" like the Mint and assorted dweebs.

RogerB

PS: Whenever someone can invent a practical room temperature superconductor, the key element - likely a lanthanide series - will have exponential growth in value.

dcarr

@7Jaguars said:
Uhh, per ounce fellas....

If the inside of a catalytic converter needs to be coated with a certain THICKNESS of pure palladium or pure platinum, then palladium is still the slightly cheaper option. Of course, palladium is currently more expensive than platinum BY WEIGHT. But palladium is still a little cheaper than platinum BY VOLUME.

jmlanzaf

@dcarr said:

@7Jaguars said:
Uhh, per ounce fellas....

If the inside of a catalytic converter needs to be coated with a certain THICKNESS of pure palladium or pure platinum, then palladium is still the slightly cheaper option. Of course, palladium is currently more expensive than platinum BY WEIGHT. But palladium is still a little cheaper than platinum BY VOLUME.

This

dcarr

@RogerB said:
A sop to a Montana palladium mine owner when there is very limited commercial use (or value).

Palladium is very useful in various industries. And it is a lot scarcer than gold as a percentage of the Earth's crust (and much rarer in terms of available stockpiles).

And like other noble metals, palladium has commercial value in jewelry, coins, etc.
It is harder to work with than gold or silver, but I like using it from time to time as a minting material.

@RogerB said:
Catalytic converters are recycled at a very high percentage - especially for a consumer product. This places a floor on availability and limits the need for new metal. Further tinning of new metal market creates a highly speculative situation where authentic users have locked in their expenses for several years, and the rest is sold to phone "customers" like the Mint and assorted dweebs.

Even the dumbest coin collectors have an average intelligence that is above the general non-collecting population. So I wouldn't call any collectors a "dweeb".

dpoole

Oh, sure, RogerB. I've accumulated all this platinum, and now I'm a dweeb, am I?

Well, Columbus was a dweeb. The Wright Brothers were dweebs.

You don't believe time travel will require platinum, but you just wait.

jmski52

The ONLY reason why the price might drop 10% is that if one of them publicized that they could meet emissions standards without using as much Pd. I know of no such announcements.

My understanding is that there is quite a backlog of unsold vehicles. Besides efficiency, technological breakthroughs, and speculation - demand is always a major factor.

Oldhoopster

@dcarr said:

@7Jaguars said:
Uhh, per ounce fellas....

If the inside of a catalytic converter needs to be coated with a certain THICKNESS of pure palladium or pure platinum, then palladium is still the slightly cheaper option. Of course, palladium is currently more expensive than platinum BY WEIGHT. But palladium is still a little cheaper than platinum BY VOLUME.

Just to clarify, the PM catalyst is not a thin homogeneous layer. The Pt and/or Pd is mixed with a ceramic washcoat slurry. The cordierite ceramic substrates are dipped into the washcoat and the slurry is absorbed into the porous ceramic and adsorbed onto the surface of the honeycomb cells. It's fired so the ceramics in the washcoat bond to the substrate.

I can't recall how the catalyst was added to the washcoat, but I don't think it was metallic. Probably something like a PtCl2 or an organometallic which might behave better and not disrupt the viscosity.

And don't quote me on this, but I think the companies that apply the catalyst have various proprietary "blends" of Pt/Pd that have been approved for use, so they can switch quickly and easily if economics factors change.

Cameonut

@Oldhoopster said:

@dcarr said:

@7Jaguars said:
Uhh, per ounce fellas....

If the inside of a catalytic converter needs to be coated with a certain THICKNESS of pure palladium or pure platinum, then palladium is still the slightly cheaper option. Of course, palladium is currently more expensive than platinum BY WEIGHT. But palladium is still a little cheaper than platinum BY VOLUME.

Just to clarify, the PM catalyst is not a thin homogeneous layer. The Pt and/or Pd is mixed with a ceramic washcoat slurry. The cordierite ceramic substrates are dipped into the washcoat and the slurry is absorbed into the porous ceramic and adsorbed onto the surface of the honeycomb cells. It's fired so the ceramics in the washcoat bond to the substrate.

I can't recall how the catalyst was added to the washcoat, but I don't think it was metallic. Probably something like a PtCl2 or an organometallic which might behave better and not disrupt the viscosity.

And don't quote me on this, but I think the companies that apply the catalyst have various proprietary "blends" of Pt/Pd that have been approved for use, so they can switch quickly and easily if economics factors change.

@Oldhoopster is right on the mark on the catalyst coatings to the cordierite substrate (the substrate can also be a stainless metal corrugated foil). Washcoats are designed to have very high surface areas that promote contact with the exhaust gases and facilitate the catalytic reactions. Most washcoats are primarily made of alumina, but also contain lanthana and ceria and other "magic dust". These formulas are typically a trade secret.

As far as the precious metals go, you want them to be distributed throughout the structure and mostly at the atomic level for most efficient use of the metal. These days PtCl2 is not used anymore because many people are sensitive to this material - gives them open sores that do not heal well. Instead organometallics are used - for example a platinum hexamine. These are more user friendly and also are a trade secret. Making these materials is a chemical feat as your are forcing reactions to occur to a metal that is considered inert to make the amines. Think high temperature and/or pressure and aggressive acids.

Sometimes the precious metals are added to the washcoat as an aqueous solution, but it can also be applied in a second step.

Washcoat technologies are fascinating, but these days the catalyst companies don't switch recipes often for a particular OEM car customer - the reason is that the car is calibrated and certified for emissions with a particular set of hardware. You can't easily change hardware (including the catalyst) without undergoing another expensive certification process. So these changes normally happen at model change. However, recipes for aftermarket catalysts are far less stringent so changes happen there more easily.