palladium price

Silver prices in Japan, India and the US all rose over the past month, as did gold prices in the same regions. Silver and gold prices in China, however, fell ever so slightly. These inputs, as well as platinum and palladium prices showing mixed movement, resulted in MetalMiner's monthly Global Precious Metals MMI® registering a value of 84 in June, holding steady at May's level.

precious metal price index chart

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The real stories that concern us, however, may reside in the PGM markets.

2015 GFMS Platinum & Palladium Survey SAYS:

Thomson Reuters recently released its GFMS Platinum & Palladium Survey 2015, and in it, noted that the platinum market to be in a deep deficit last year "(prior to inventory movements) of 1.02 million ounces, singularly owing to major strike-related production stoppages in South Africa." The 2014 deficit comes on the heels of surplus in 7 of the last 8 years; the deficit is expected to continue.

Meanwhile, palladium has been a market in deficit since 2007. The GFMS team estimates "the palladium market deficit last year at 1.58 million ounces, representing the most severe market imbalance for more than a decade."

GFMS Platinum, Palladium Price Forecast

According to the survey, the average platinum price is forecast to fall by 16% year-on-year, averaging $1,170/oz, about 5% higher than May's closing price on the MetalMiner IndX. Analysts indicate that this suggests a closing of platinum’s discount to gold. The average palladium price forecast is broadly flat year-on-year at $800/oz, not too much higher than current prices.

William Tankard, research director of mining at Thomson Reuters, is quoted as saying, “It appears to us that forward buying programs by the automotive sector are developing increasing levels of flexibility for these consumers to purchase metal when they want to, rather than need to; the sector is becoming increasingly price-sensitive. Without enduring production cuts to be achieved, by permanently closing high-cost mines, the platinum market is expected to return to surplus next year. Of course, it’s a huge challenge as a producer to make that call, incur restructuring costs and permanently close capacity, if you believe the price will recover in the short- to medium-term.”

How Does That Compare to MetalMiner's Outlook?

It roughly matches what our lead forecasting analyst, Raul de Frutos, has written recently; in short: "Recent weakness in the dollar is giving a boost to precious metals. However, these price movements have been quite shy so far. It still makes sense to be long-term bullish on the dollar and bearish on precious metals."

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MetalMiner's basket of industrial metals used by the auto industry, the monthly Automotive MMI®, registered a value of 85 in June, a decrease of 2.3% from 87 in May.

Automotive_Chart_June-2015_FNLAs the chart shows, this move basically undoes May's gains and puts the automotive metals index back where it was in April. The loss nearly erased the 2.4% gain last month as palladium and platinum prices either fell or traded sideways and the other metals tracked in the index weren't really responsible for the recent movement, anyway.

Robust Car/Truck/SUV Sales

While automotive sales remain strong in the US and abroad, those sales are not creating the necessary demand for automotive materials to move the needle this year – even as companies such as Alcoa, Novelis, ArcelorMittal and others invest heavily in automotive aluminum and steel facilities worldwide.

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US car buyers bought new cars and trucks at the fastest pace in nearly a decade in May, US auto sales data released by the automakers showed. General Motors, Fiat Chrysler and Honda reported increases. Toyota, Nissan and Ford saw declines.

Americans bought about 1.63 million new vehicles in May, up 1.6% from about 1.61 million in the same month last year, according to automotive statistics provider Motor Intelligence. Industry forecasts had expected a 1% decline in sales, to 1.59 million, in part because May was one sales-day shorter than it was last year.

May’s seasonally adjusted annualized rate came in at 17.8 million, well past analysts expected 17.3 million.

Steel Inventories Still High

The big drag on the index continues to be the price of steel, which reached another new low this month. Cheap imports and high inventories are to blame in that market, and those high inventories will continue to make the road just as hard to ride for automotive.

Domestic steel producers have filed anti-dumping and countervailing duty petitions against five countries related to corrosion-resistant steel, the type used in automotive applications.

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The petitions charge that unfairly traded imports of corrosion-resistant steel from China, India, Italy, South Korea and Taiwan are causing material injury to the domestic steel industry. The petitions further charge that significant subsidies have been provided to the foreign producers by the governments of those countries.

It will take months to know if this action produces significant relief of the cheap imports and, even then, the anti-dumping and CVD determinations might not be high enough to have an effect. The end-use automotive market and its much of its material supply chain is intrinsically tied to the steel market.

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Bolstered by a weaker dollar, global precious metals rose last month as industrial demand for palladium was finally joined by higher gold bullion and platinum prices.

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The number of Americans applying for first-time unemployment benefits inched up by 3,000 to a seasonally adjusted 265,000 in the week ended May 2, the Labor Department said recently. This was less than the 275,000 economists predicted and within reach of the unrevised 262,000 level for the prior week—the lowest since 2000.

This is the latest sign that an interest rate hike may come from the Federal Reserve as continued improvement in the US labor market might clear the path for rate hikes.

How High Will They Go?

Once the Fed starts the cycle of interest rate increases, the market can focus on how high the rates may rise, which will be less of a weight since the expectation is that rates won’t rise very much. Higher interest rates are bearish for gold because they give investors a reason to move money into investment vehicles that produce a yield. Gold has no yield.

End of the Stock Supercycle

There is also rampant speculation that a combination of downward earnings revisions and the difficulty of the banking system to turn bank reserves into money growth will lead to a large correction in the stock market. Precious metals are also a hedge against falling stocks.

The monthly Global Precious Metals MMI® registered a value of 84 in May, an increase of 1.2% from 83 in April.

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Seems that somebody forgot to tell the automotive metals that the bear market was still going on this month. Strong aluminum and high-strength steel demand, and end-user purchases, have again made auto the standout in a field of mostly down markets.

After flattening in April, the monthly automotive MMI® registered a value of 87 in May, an increase of 2.4% from 85 in April. A big factor was the performance of aluminum coil on the index, as its index broke resistance and soared as well.

Pool 4 Tool's Automotive SRM Summit

China removed export taxes on aluminum, opening more markets up to the automotive-grade sheet and coil prices that automakers in the West have been experimenting with for a decade now. Prices of palladium, lead and even copper also notched strong LME growth filling strong demand from domestic and foreign automakers.

Consumer Sales Rising

In the US market, April new car sales rose by 5% from a year ago, to more than 1.463 million units as predicted in a J.D. Power and LMC Automotive's mid-month auto sales forecast update. April's totals are anticipated to be the highest since April 2005.

SUVs and smaller "crossover utility vehicles" were the main leaders in the sales surge. While not all US automakers posted strong Q1 results, profits were generally up even if they were up lower than some analysts expected. General Motors' results were better than in the same period a year ago, when costs associated with safety recalls limited quarterly profit to $125 million.

Fiat Chrysler Automobiles reported a profit of $101.2 million (€92 million) d​uring the first quarter compared with a loss of $173 million (€190 million) during the same period last year.

What This Means for Automotive Buyers

Consumer demand for automobiles traditionally picks up in the summer months, so this could be the beginning of a big turnaround for our Automotive MMI®. Fundamentals continue to look strong as the index had better supply and demand numbers than other metals even when it was losing price ground. Stay tuned.

For actual prices of the automotive metals this month, read the full article by logging in or signing up to become a MM member.

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With April's reading, MetalMiner's monthly price index tracking metals used in the automotive industry has stanched its general downward slide – the index dipped below the baseline of 100 in February 2014 and has been trending down since. The monthly Automotive MMI® registered a value of 85 in April, on par with March's value (check out last month's report). But with most base metals markets in a bearish mode, this index may have further to fall.

The downward slide had particularly begun accelerating in Q4 of last year and has continued through Q1 2015, a sign that the auto index's basket of metals has seen the same bearish treatment as the Raw Steels, Stainless and Aluminum MMIs.

US Auto Sales 'n Oil Prices–March 2015

Of the US Big Three, GM and Ford's March sales both dropped this year compared to March 2014, while Chrysler gained nearly 2% in its monthly sales over last year. However, both GM and Chrysler's year-to-date sales so far in 2015 are quite robust over the same amount of time in 2014 (5.3% and 6.5%, respectively), while Ford's YTD sales are also in the green.

Bargain-basement oil prices have helped consumers at the gas pump, which in turn has spurred sales. Light truck sales, for example, have been outpacing car sales for the past 15 months, and have spiked to their highest level in several years in March 2015. Primary metal producers are on the bullish demand bandwagon as well – Alcoa recently received the promise of government cash for lightweight auto-grade aluminum production.

Essentially, the automotive OEMs and their suppliers should be paying close attention to our Automotive MMI® trend – with finished steel, aluminum, platinum and palladium at multi-month lows, while consumer vehicle demand appears to be high, some spot buying could be in order...but we can't say for sure how much further this index has to fall. MetalMiner will, however, be offering an exclusive automotive metal market outlook...

SRM Automotive Summit

If you happen to be in Southeast Michigan in May – and chances are, if you work for an auto OEM or many of their suppliers, you already will be – join MetalMiner Executive Editor Lisa Reisman at the POOL4TOOL SRM Automotive Summit, to be held at the Townsend Hotel in Birmingham on Friday, May 22.

Lisa will present "Sourcing Strategies for the Automotive Metals: H2 2015." Don't miss out this analysis and a great overall event – register here.

This Month's Actual Metal Prices: Automotive MMI®

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Without major central bank actions, precious metals will continue to fall in Q2 and possibly longer.

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The decline that began in February has taken hold and looks to be a long-term trend that won't end, based on market forces alone, for some time.

The monthly Global Precious Metals MMI® registered a value of 83 in April, a decrease of 3.5% from 86 in March.

Palladium Weakness

With most of our metals still in bearish territory, even if they're posting small gains on the monthly MMI, global precious was a bright spot through January, when it was still being bolstered by strong industrial and investor demand for palladium. That demand began dropping last month and, without palladium to prop it up, our index fell even further this month without much hope for recovery.

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As my colleague Raul de Frutos pointed out recently, palladium has broken a key support level and this indicates that selling pressure is increasing as the metal declines. It's now recording lower high points on the CME's spot index and that's a clear sign that there is diminishing buying pressure during upward bounces.

Palladium-backed exchange-traded funds also saw their biggest weekly outflows (more than 50,000 ounces) since August last week. A strong dollar and low oil prices look like barriers that automotive demand, alone, can't overcome for palladium. The mining cost of platinum and palladium has gone down with the ruble in top producer Russia and supply should be abundant enough to meet demand as production is being buttressed by the favorable exchange rate there and in number two producer South Africa.

Meanwhile, in Goldville...

Gold is still falling in most of the world in the face of that strong dollar, as well. While many long-term forecasts predict that Chinese and Indian demand will eventually propel the world's favorite investment metal upward, the continuing strength of the dollar as a reserve currency is hurting it even more than base metals with more industrial uses.

The Federal Reserve remains conservative when it comes to when it will raise interest rates for and it's not likely that other central banks will make a major move to rein in the strength of their currencies before the Fed. Chairwoman Janet Yellen also warned of continuing slow growth domestically and internationally this month, an argument that would seem to support keeping the rates low for the foreseeable future.

My colleague, Stuart Burns, wrote this month that other strong economies such as the UK are not likely to join in raising central bank rates for at least a further 12 months even if the Fed raises its rates tomorrow. That will exacerbate the dollar’s strength, particularly against economic regions such as the European Union, which is still dependent on a quantitative easing program.

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LME copper prices, Chinese lead prices, and Korean aluminum premium prices rose this week, while US HDG steel prices and US palladium prices dropped. For exact price points of all of these and more, click below!

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North American Palladium's stock rose by 51.8% in the past month. This combination of strong price performance and favorable technical data, could suggest that the stock is on the right path.

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North American is an established PGM producer that has been operating its main revenue source, its Lac des Iles mine in northern Ontario, Canada, since 1993.

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The gold price fell to a two-month low on Friday, after data showed the US economy created more jobs than expected last month, bolstering the case for the Federal Reserve to raise interest rates around the middle of this year.

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Gold for April delivery, the most actively traded contract, was recently down 0.9% at $1,185.70 an ounce on the Comex division of the New York Mercantile Exchange. That is the lowest intraday level for the most active gold contract since Jan. 5.

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MetalMiner’s monthly Automotive MMI® has hit some bumps in the road – but the wheels haven’t quite fallen off yet.

Our automotive metals price index fell to 85 in March, a decrease of 2.3% from 87 in February. While automotive continues to be one of our stronger metal sectors, particularly aluminum and palladium used in automotive applications, it’s being dragged down by crude oil and other commodities that are keeping prices low.

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Despite a relatively healthy US automotive industry and strong results from manufacturers of original equipment (OEMs), prices are not rising for automotive raw materials such as steel and copper. Copper prices are a big component of our Automotive MMI® and their free-fall continues (even though the 3-month LME copper price inched up a bit this month). General Motors recently cut production of some of its more popular models as the cars are sitting on dealer lots awaiting buyers despite low prices and abundant supply of materials.

Thanks to the war in Ukraine and economic sanctions, Russia’s steel costs are now the lowest in the world and, as with gold before it, Russian steelmakers such as Severstal and Novolipetsk Steel are taking advantage of the situation by exporting heavily and getting paid in dollars and euros for the same steel – whose production is paid for by rubles that are worth at least 50% less.

US HRC and HDG both lost significant price territory to US steel imports this month, as US producers cut prices in an attempt to compete with the imports. According to recent figures released by the American Iron and Steel Institute (AISI), US steel imports rose 33% in January compared with the year before, reaching 3.85 million tons, compared with 2.9 million tons a year earlier, as reported by the WSJ. “The jump in imports comes as oil and gas drillers cancel orders for steel pipe, underscoring the resilience of overall U.S. demand compared with other markets,” according to the Journal. The continuing decline in the price of iron ore is also a factor in falling steel prices.