Review Platinum and Palladium Commodities Market in 2011

Review platinum and palladium commodities market in 2011, platinum and palladium prices suffered a major downwards correction in early October 2011, reaching lows for the year, as faltering confidence in prospects for economic growth in Europe led to a flight from risk assets. Prices recovered well in the middle part of the month and saw some further appreciation by the end of the month as a solution to the eurozone crisis seemed closer.

Platinum largely tracked the gold price again this month, maintaining its discount in both upwards and downwards movements. PLATINUM Platinum’s price slumped in early October, losing $78 to fix at a low for the month of $1,442 on the 5th, the lowest since December 2009. Even at this price, platinum found little buying interest in China due to the National Day holiday. Platinum gained some ground over the following days as risk appetite appeared to return following an announcement that the EU would recapitalise Europe’s vulnerable banks.

Platinum markets remained nervous over Europe’s growth prospects after a downgrade of Spain’s debt and a dispute over raising the EU bailout fund. With investor sentiment remaining negative regarding prospects for industrial demand, platinum’s price was subdued mid-month. As many industrial customers had bought into recent price dips, there was also low physical demand.

Platinum price rallied briefly on the 17th but then retreated as the market absorbed news of disappointing economic growth from China and the USA. After dipping beneath $1,500 once again, platinum rallied again in the week of the 24th, eventually reaching a month high of $1,645 on the 28th on the back of optimism over the proposed EU deal to manage the sovereign debt crisis. A rallying gold price also gave some support to platinum. On the supply side, reports of falling quarterly output from Aquarius and Zimplats appeared to have little effect on the price. Platinum ended the month at $1,606, up $86 in the month.

Platinum futures positions declined by almost 200,000 oz in the month to 25th October with the heaviest liquidation in early October. Platinum ETF positions declined by around 42,000 oz to the 27th October with selling in the London, US and Source funds but increases in the Swiss funds. PALLADIUM Palladium dropped below $600 for the first time since October 2010, fixing at a low for the month of $561 on the 5th. This represented the low point in the ‘washout’ that had begun in September and seen the price lose over $200.

Reports out of Russia that the last 9 tonnes of palladium from state stockpiles of palladium will be shipped in 2012 and 2013 gave some support to the price, although perception of future supply shortfalls appear to have largely been priced in by the market. Palladium regained the $600 level, peaking at $642 on the 17th. The price subsequently fell back below $600 with flagging investor confidence related to wider economic concerns. Like platinum, palladium benefitted from more positive sentiment regarding the eurozone as the new bail-out plan was revealed. Together with news from Norilsk Nickel of a fall in year-on-year palladium production in the 9 months to September, palladium was given some upwards momentum and reached a month-high of $667 on the 28th. The price then fell back to end the month at $651, up $47 in the month.

Category: Palladium, palladium commodities, palladium prices, platinum, platinum commodities, platinum futures