Palladium Prices at 5Yr-Low, Expected to be Even Weaker as Demand for Catalytic Converters Slides

Palladium (XPDUSD) prices fell below $1,000 an ounce for the first time in five years on Thursday, November 9, hitting as low as $991.53, bringing this week's losses to about 10% as concerns about a global economic slowdown grew.

There has been no reduction in short-term supply following the UAW strike action, and demand has been weaker than expected. Additionally, the massive accumulation of short positions has additionally elevated downside risks for palladium.

The metal used in car catalytic converters continued to rally starting in 2018 and peaking in 2021, but demand fell as consumers tended to buy more electric vehicles, leaving palladium on a long unknown and winding its path down.

The copper-to-palladium ratio has been rising since March 2020 and jumped sharply last week, according to Bloomberg. Copper is more commonly used in electric vehicles than internal combustion engine vehicles. A recent Reuters poll unsurprisingly found that commodities analysts expect platinum and palladium prices to further fall in 2024 as combustion engine car production slows. Both metals are known to be used in catalytic converters in the automotive industry, while platinum is also used in other industries, such as biotechnology, and as a precious metal.