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Palladium: U.S. Foreign Dependence

The United States relied on foreign sources of palladium to meet 37% of its domestic consumption needs in 2021.

How important is palladium? It is commonly used, along with other platinum group metals (PGMs), as an active substance in automotive catalytic converters (as well as in semiconductor production).

About one-third (30%) of U.S. palladium imports came directly from Russia.

Palladium prices have continued to rise during Russia’s war against Ukraine.

According to the U.S. Trade Representation (USTR), many companies are trying to source palladium from outside Russia, but it has been estimated that it would take at least five years for South Africa (the world’s second largest palladium producer) to ramp up its production to replace Russian production.

Therefore, USTR added that these price increases and supply constraints are likely to influence the U.S. catalytic converter market.

Palladium

According to a Sprott Physical Platinum and Palladium Trust benchmark, palladium mine production was dominated in 2021 by Russia and South Africa, which accounted for approximately 38% and 39% of global production (excludes supply from Russian stockpile sales and recycled palladium), respectively.

World mine production increased from 6.16 million ounces in 2020 to 6.7 million ounces in 2021.

Like platinum, palladium is a key component in automotive manufacturing, particularly through its use in gasoline autocatalysts.

Like platinum, palladium can be used to form the surface catalyst on which critical chemical reactions take place, converting exhaust emissions into neutral compounds. In this sense, palladium is the only known substitute for platinum.

While industrial manufacturing includes demand primarily from the electronics, dental and chemical industries, electronics manufacturing includes palladium resistors and capacitors used in circuit board manufacturing.

According to JM, palladium usage in various industrial sectors increased to 1.69 million ounces in 2021.

 

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