Thursday, August 30, 2007

Palladium world mine production

Following an extensive research I have collected data from various sources such (USGS, Johnson Matthey, US Census, Customs, Producers…) and harmonised them in order to produce a Palladium world mining output history time series going back to the beginning of 1900. Below is the chart of the yearly world Palladium production (in thousand troy ounces)1915 to 2007. As far as the nominal amount is concerned, it is clear from the chart the great increase in supply of the seventies and eighties following the increasing demand of the world automakers for catalytic converters. The output growth stalled at the end of the nineties and resumed its growth after year 2001 following the spike in prices of the same year due to Palladium shortage, shrinking Russian stockpiles deliveries and aggressive automakers accumulation. The world producers invested heavily in new mining supplies, especially in South Africa following 2001 and the total supply increased up 7 million ounces per year over the last few years. It is very interesting to note, however, that the rate of increase in world output has started to decline over the last couple of years following almost 10 years of increases: this is a very interesting situation, we have now an average 5 years rate of growth of 3% (actually 2007 output is projected to be almost 5% below 2006 level). New and additional demand for potential new Palladium application is gradually emerging for the next few years (Fuel cells, food insert, hydrogen purification, diesel catalytic converters…) and considering the declining Palladium output rate of growth I expect the Palladium market to enter a new structural phase of supply deficit over the next few years. Additionally, no new resources have been found over the last few years with no new major palladium deposits found, and, even if new deposits can be found in the next few years it will take a long time before turning them in operational mines. I am therefore very bullish for the long term price of Palladium.



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