Cheap Oil is Inflating the Price of Palladium

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America’s renewed love affair with the automobile is tightening global supplies of palladium, a metal rarer than gold.

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While each car requires only a few grams of palladium, demand in 2015 will probably exceed supply for a fourth consecutive year, according to Johnson Matthey Plc, a maker of catalytic converters for automobiles that use the metal to reduce harmful tailpipe emissions. Global car sales rose 3.4% last year to a record 81.6 million vehicles, Macquarie Group Ltd. said in a report last week.

The lowest oil prices in 5 years and cheap bank loans are helping to extend a rebound in automobile sales that began in 2009, boosting demand for everything from catalytic converters to Alcoa Inc.’s aluminum sheets and Goodyear Tire & Rubber Co.’s wheels. Even after palladium prices soared to a 13-year high in September, Morgan Stanley and Deutsche Bank AG remain bullish because car parts account for 70% of the metal’s use.

At $773.00 per ounce, US palladium bar moved up 1.0% on Monday, January 26, the day’s biggest change. The price of Chinese palladium bar increased 0.6% to CNY 174.00 ($27.73) per gram. The price of Japanese palladium bar declined 0.3% to JPY 2,926 ($24.93) per gram.

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The price of US platinum bar fell 0.4% to $1,264 per ounce. The price of Japanese platinum bar held steady at JPY 4,827 ($41.13) per gram. Chinese platinum bar held its value yesterday at CNY 271.00 ($43.19) per gram.

US gold bullion prices saw a 0.6% decline to $1,294 per ounce. At JPY 4,919 ($41.91), the price of Japanese gold bullion finished the market day up 0.4% per gram. Indian gold bullion finished the day down 0.4% to INR 28,165 ($458.41) per 10 grams. Chinese gold bullion prices rose 0.2% to CNY 260.30 ($41.49) per gram.

Japanese silver saw its price rise 1.0% to JPY 689.00 ($5.87) per 10 grams. Chinese silver finished the day up 0.5% to CNY 3,820 ($608.84) per kilogram. The price of US silver ended a two-day climb, settling at $18.30 per ounce. After a couple of days of improving prices, the price of Indian silver held steady at INR 40,729 ($662.90).

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