Record-breaking prices of palladium and platinum in 2022 - Elemental Asia

Record-breaking prices of palladium and platinum

Record-breaking prices of palladium and platinum

Palladium and platinum are precious metals that are active catalytic materials, which are part of an automobile catalytic converter. These chemical elements are aimed to neutralize the noxious fumes emitted from the engine during its operation. Therefore, the catalytic converter plays a crucial role in improving air quality and reducing the negative impact on the surrounding nature.

Compared to August 2021, palladium and platinum prices have so far reached a record high. Their value may change shortly. What is responsible for the record prices of these compounds, and what can we expect to see as they rise?

What drives up the price of precious metals?

Due to their relatively stable value, precious metals have always attracted the attention of many investors. The global pandemic has made the interest in these raw materials even greater. This is influenced, among other things, by rising inflation, which has motivated those with savings in cash to choose a more stable source of investment than a currency. It is not only the rising general price level that has influenced the increasing value of palladium and platinum.

The dramatic situation in Ukraine and the related sanctions imposed on Russia have also contributed to the increase in the price of these precious metals. Russia is the leader in global palladium mining and is responsible for supplying more than 40% of this element. Its rising cost is related to fears of disrupting the supply chain of this bullion, and it is running out of reserves. The political situation in the world and the successive cutting off of Russia from the world economy make the prices of precious metals rise.

Palladium price in 2022 - what does it depend on?

As a major producer of precious metals, Russia accounts for the world supply of approx. 44% of palladium and almost 11% of platinum. Reducing cooperation with this country affects the continued supply of many raw materials. The world demand for palladium is really high - it is used, among other things, for the production of catalysts pollution control devices, but also for the creation of jewellery or electronic devices. Therefore, this element's small level of reserves makes it much more valuable.

It is not just Russia's military actions that have affected the value of palladium. There has been an undersupply of palladium in the market for some time due to low above-ground inventories. Increased technological development and increased demand for equipment related to assaying and reducing contamination levels have also affected the increased demand for the palladium raw material. Increased demand with inadequate supply affects the raw material price as the demand is greater than the available quantity. Currently, 1 gram of palladium costs $80.03, but this value is changing at an alarming rate.

What is driving the price of platinum up in 2022?

The uses of platinum are extensive. It is used in many areas related to our everyday life. It is used in the automotive industry, in the production of catalytic converters, but also in the creation of luxury jewellery, in electronics and electrical engineering, and in the chemical industry. However, its production is not very high - if 25 ounces of gold are mined, less than an ounce of platinum is produced for that amount.

The post-pandemic demand for cars has significantly affected the demand for platinum, which is used, among other things, to make catalytic converters. As both palladium and platinum are used to create these car parts, a shortage of the former may result in platinum replacing it. Therefore, its quantity will also decrease. High demand with low supply generates higher prices - the current cost of buying 1 gram of platinum is $33.46, but its price is very dynamic.

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