According to Commerzbank’s Commodity Analyst Carsten Fritsch, the price of Palladium has increased by 8% since Wednesday, surpassing $1,000 per troy ounce for the first time in two months.
The Bullish Price Reaction Seems Justified
“The price of Palladium reached a five-month high of $1,060 this morning. This surge was triggered by Russian President Putin’s comments about potential export restrictions on certain metals in response to Western sanctions. While Palladium was not specifically mentioned, Nickel was. Since Palladium is a by-product of Nickel production in Russia, any reduction in Nickel output could indirectly impact Palladium.”
“Since the onset of the Ukraine conflict 2.5 years ago, there has been speculation about possible Russian retaliatory measures against Western sanctions, with Palladium frequently in the spotlight. Russia, accounting for around 40% of global Palladium mine supply, is the leading producer, followed closely by South Africa. A decrease in Russian supply would likely lead to a swift market shortage.”
“Although no such reduction has occurred so far, it should not be dismissed as an assurance for the future. The Palladium market should remain cautious of this risk. The current price reaction is thus justified, even though it may also be influenced by short position coverages.”
