Palladium ETF Soars on Speculation of Dwindling Supplies


Shares of the ETFS Physical Palladium Shares (NYSE:PALL), the lone ETF solely backed by physical holdings of palladium, are up 4.4 percent in late trading following a report that said supplies of the precious metal could be at a deficit this year.

Palladium futures are up four percent, putting the metal on pace for its best one-day performance in 11 months, according to Reuters. Earlier today, platinum metals group specialist Johnson Matthey said palladium supplies will face the largest deficit this year since 2012, Reuters reported.

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Surging demand for automobiles and dwindling stockpiles in Russia, the world's largest palladium producer, are viewed as at least two of the catalysts behind the palladium deficit. Palladium is used in the production of catalytic converters in automobiles manufactured in China and the U.S., the world's two largest automobile markets.

Labor strife in South Africa is another reason behind the palladium deficit as the country is the second-largest producer of the metal. PALL and the ETFS Physical Platinum Shares (NYSE:PPLT) surged after South African police killed 34 protesters and strikers in September.

South Africa is the largest platinum-producing nation. Johnson Matthey said palladium demand will outstrip supplies this year by 915,000 ounces. The firm sees a drop of almost 10 percent for platinum supplies due to the labor unrest in South Africa. PPLT is up 1.2 percent today on light volume.

PPLT is up 11.7 percent year-to-date while PALL has tumbled 7.3 percent.

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