Palladium tops $1,800 for first time on tight supply

Palladium surged to a record, topping $1,800 as stricter airquality rules boost demand for the metal used in vehicle pollution-control devices. Spot prices climbed 2.1 per cent to $1.802.24 an ounce at 11:09 am in New York. The metal is up more than 40 per cent this year.

While car sales have been sluggish, tighter environmental laws in Europe and China are boosting consumption, according to Australia & New Zealand Banking Group. Production is likely to continue to trail use through 2020 amid increasing demand, Bloomberg Intelligence analyst Eily Ong said in an October 17 note. Speculation that the US and China are moving closer to a trade deal also helped lift prices on Monday.

“That tightness in the palladium market continues to be the main driver,” Ryan McKay, a commodities strategist at TD Securities, said by phone from Toronto. “You also have the better sentiment in the industrial metals complex. That also helps palladium.” There’s been concern that palladium’s hefty price could prompt automakers to find lower-cost materials for their pollution-control equipment. So far there isn’t any sign of that happening.