Business Maverick: Palladium Extends Gains After Suspension of Two Russian Refiners

The precious metal’s latest rise, following a 8.7% surge on Friday, comes after the invasion of Ukraine and the sanctions that followed saw prices soar to a record last month. Russia produces about 40% of freshly mined palladium, which is mostly used in catalytic converters for gasoline-powered vehicles.

Palladium climbs after Russian refiners suspended

On Friday, the London Platinum & Palladium Market suspended Krastsvetmet and Prioksky Plant of Non-Ferrous Metals from its goods delivery and sponge accreditation lists. The LPPM’s announcement reverses its decision one month ago to continue letting the Russian plants supply precious metals to the trading hub. The CME then suspended the approved status for warranting and delivery of certain platinum and palladium brands from the two refiners until further notice.

Meanwhile, the Japan Exchange Group said the Osaka Exchange is considering revoking Russia’s good delivery designation for platinum and palladium brands in its futures market following the LPPM’s move. If the designation is canceled, it’s expected that the number of open interests will decrease “sharply,” and liquidity will decline for some time, it said.

“Palladium supply was already under significant pressure as a result of strong vehicle sector demand and inventory concerns related to the Russia-Ukraine conflict,” said Gavin Wendt, senior resource analyst at MineLife Pty. “The latest suspension of Russian refiner output will further exacerbate market concerns and fuel even more price upside.”

Spot palladium rose 2.6% to $2,495.05 an ounce at 10:42 a.m. in Singapore, and is up 31% this year. Prices hit an all-time high of $3,442.47 on March 7.

In other precious metals trading, gold held an advance as investors sought a store of value amid the concerns over the economic fallout from the war in Europe and the inflation pressures from commodity-market disruptions. Still, rising 10-year Treasury yields are weighing on non-interest bearing bullion.

Federal Reserve Bank of Cleveland President Loretta Mester said she’s confident that the U.S. will avoid a recession as the central bank tightens policy, though the inflation rate will probably remain at more than 2% into next year.

Holdings in exchange-traded funds backed by the precious metal are at the highest level in more than a year, according to initial data compiled by Bloomberg.

Spot gold slipped 0.2% to $1,943.35 an ounce after rising 0.8% Friday, while silver fell and platinum advanced. The Bloomberg Dollar Spot Index added 0.2% after climbing 1.1% last week. BM

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