Palladium may climb as high as $500/ounce

By Tom Stundza -- Purchasing, 4/30/2008 12:00:00 PM

Palladium, selling for an average $445/troy ounce in the first four months, has been erratic on a monthly basis but still could trade as high as $500 in coming months, says London-based metals consultancy GFMS. The consultants say mining and smelting problems in South Africa and reduced output of lower-grade metal in Russia will continue to reduce world supply at the same time that demand for autocatalysts, primary in Asia and India, remains strong.

The GFMS consultants believe the supply deficit posted in 2007—which brought the annual average price to $356 from $321 in 2006—is likely to continue in 2008. Societe Générale analysts agree and forecast earlier that palladium production would fall 65,000 ounces short of demand in 2009, the first deficit in at least five years, partly because jewelers and automakers will switch from more expensive platinum. Bloomberg has reported that Societe Générale analysts have forecast palladium's 2008 price at $465.