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Platinum and palladium forecasts slashed after chip scarcity hits auto sector: Reuters ballot

  • Palladium seen averaging $2,050/oz in This autumn, $2,150/oz in 2022
  • Platinum seen averaging $1,000/oz in This autumn, $1,110/oz in 2022
  • Individual forecasts ,

Oct 28 (Reuters) – Analysts and merchants have sharply lowered their worth forecasts for platinum and palladium after a chip scarcity compelled auto makers to chop manufacturing of autos containing the metals, a Reuters ballot confirmed on Thursday.

Auto makers account for some 40% of platinum demand and 80% of palladium demand, embedding them in exhaust techniques to neutralise dangerous emissions.

The chip scarcity worsened over the summer season and is anticipated to proceed by subsequent yr. learn extra

It helped drag platinum costs from a seven-year excessive of $1,336.50 an oz in February to as little as $901.30, whereas palladium dropped from an all-time peak above $3,000 an oz in May so far as $1,841.93.

Prices of each metals have regained some floor, with platinum buying and selling round $1,010 an oz and palladium round $2,000 on Thursday, however additional features will probably be restricted, the ballot of 27 analysts and merchants this month discovered.

It returned median forecasts for platinum to common $1,000 an oz within the remaining three months of 2021 and $1,110 in 2022.

For palladium, it predicted averages of $2,050 an oz within the fourth quarter of 2021 and $2,150 in 2022.

An identical ballot three months in the past forecast averages for platinum of $1,137.50 within the fourth quarter and $1,228 in 2022 and for palladium of $2,800 within the fourth quarter and $2,625 in 2022.

Prices plunged this year as a chip shortage cut production of automobiles containing the metals
Prices plunged this yr as a chip scarcity reduce manufacturing of vehicles containing the metals

Analysts mentioned demand ought to enhance because the chip scarcity eases and automobile makers could even overproduce to replenish stockpiles once they can — probably lifting costs.

Two of the three who predicted supply-demand balances mentioned palladium can be in deficit subsequent yr, and two of the three mentioned platinum can be oversupplied.

Longer time period, the phasing out of combustion engines will probably be worse for palladium as a result of platinum is much less depending on the auto trade and is utilized in hydrogen gasoline cells, mentioned StoneX analyst Rhona O’Connell.

“With fuel cells finally getting political backing for vehicles, especially heavy duty (vehicles), the outlook (for platinum) is very promising,” she mentioned.

For palladium, she mentioned, “the longer-term outlook is bordering on bleak”.

Reporting by Bharat Govind Gautam in Bengaluru and Peter Hobson in London; enhancing by Kirsten Donovan

A worker attends to machinery at a smelter plant at Anglo American Platinum's Unki mine in Shurugwi, Zimbabwe, May 16, 2019. REUTERS/Philimon Bulawayo

Prices plunged this year as a chip shortage cut production of automobiles containing the metals