Thursday, January 29, 2009

Palladium Catalytic Converters

In 2007 there were 70 million cars sold new worldwide. However, 2008 didn't bring car makers as much luck, with a decline in auto sales of 16%. In November, compared to November 2007, sales dropped 36%. How long will this recession last? No one knows for sure, but sources point to it lasting until the latter months of 2009.

So what does this mean for palladium? When car sales were still somewhat okay in early 2008, palladium reached a price of $600. However, with decreased demand for new vehicles, there is less need for the car manufacturers to buy palladium--along with platinum and rhodium--to produce catalytic converters.

Not to fear, though. China and Indian have over a billion people each, as compared to just over 300 million in the US. These up and coming countries will continue to increase car production for the years to come. These cars will need catalytic converters, and those catalytic converters will need metal palladium. Palladium one ounce palladium prices will rise eventually.

Palladium Demand Palladium Supply

The world demand for palladium is around 7.2 million ounces. That's at the end of 2008 when car sales are down. The world supply is actually down 12%, but it's still at 7.5 million ounces which is enough to reach demand. Most of this supply comes from mining, but over 1 million ounces come from recycled palladium, such as recycling catalytic converters.

While the world's economy continues to suffer, so will the auto industry, and so will demand for palladium. But the future looks bright. Diesel engines require more palladium and large SUVs which have been popular recently are larger so obviously require more palladium catalyst. China and Indian may help matters. As demand increases, though, that 1 million oz palladium from recycled catalytic converters may increase to 1.5 or even 2 million, who knows.

1 comment:

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