Platinum and palladium have surged in recent weeks. As the global economic recovery continues and global pollution standards tighten, the recent mine site disruptions suggest hefty deficits and a path toward $3,000/oz for palladium and $1,350/oz for platinum over the next twelve months, strategists at TD Securities report.
“The recent mine site problems and the resulting lowering of production guidance by Norilsk should see the supply-demand conditions become even tighter. It is estimated that 2021 production from the impacted mine operations will directly reduce platinum production by some 185koz in 2021, with a reduction of some 681koz for mined palladium supply. However, there will be a 100koz offset for palladium, as the company uses above ground supply to deliver more to the market than what comes out of the mines.”
“The palladium market should record a massive defect of some 1.16 million oz in 2021 and some 600kz in 2022, with platinum showing a deficit of 250koz and 16koz over the same period. This suggests that palladium could again challenge the pre-COVID high of $2,883/oz recorded back in March 2020, with a path to $3,000/oz very much in the cards.”
“Platinum should trade at the highest level in well over seven years, topping $1,350/oz over the next twelve months. Traders should also expect very robust jumps in lease rates, as the front end of these markets tighten up.”
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