Palladium will trade between $180 per oz and $280 per oz and its movement will be largely dictated by investor interest, Johnson Matthey has claimed today (18th May).

The company confirmed in its new 'Platinum 2009' report that the palladium market remained in a surplus of 460,000 oz during 2008, while demand rose by 15,000 oz to 6.85 million ounces.

However, it also suggested that the economic crisis will see overall demand for the metal fall in 2009 - particularly in the autocatalyst and industrial sectors - although physical investment and jewellery demand may increase.

"Johnson Matthey forecasts that sales will again be sufficient to keep the palladium market in surplus," stated the report.

"Investor behaviour will be key to the performance of the palladium price: any rise in commodity investment could see palladium trade as high as $280 within the next six months.

"Without this investor interest, palladium could trade as low as $180 within the same period."

Johnson Matthey's data showed that gross autocatalyst palladium demand dropped by 3.6 per cent to 4.38 million ounces in 2008.

In North America, the main market, sales of the metal declined by over 20 per cent to 1.35 million ounces, with activity badly affected by a sharp fall in light duty vehicle production.

However, this was countered by a marked increase in the use of palladium/platinum catalysts for diesel vehicles in Europe, where tougher emissions restrictions are in place.

This pushed total demand for palladium up by 30,000 oz to 950,000 oz, while autocatalyst demand also increased in China, Japan and the 'rest of the world' category.

In addition, the company confirmed that total global supplies of the metal decreased by 14.8 per cent to 7.31 million ounces last year.

Production cuts in North America in the latter stages of the year saw its supplies shrink to 910,000 oz, while mining problems in South Africa saw its sales fall by 335,000 oz to 2.43 million ounces.

In Russia, total supplies dropped to 3.6 million ounces, primary production fell and state stock sales of palladium were 960,000 oz, representing a significant annual slump of over 500,000 oz.

Finally, Johnson Matthey revealed that net demand for palladium jewellery leapt 19.6 per cent to 855,000 oz over the course of the year.

North America and Europe (up to a combined 105,000 oz) continued to adopt the metal in their mainstream jewellery industries, while net demand rose from 500,000 oz to 650,000 oz in China.

Johnson Matthey press release

Ÿ Adfero Ltd