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Platinum to average $1,056 an ounce in 2018; Palladium at $1,019 an ounce

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NEW YORK (Scrap Register): TD Securities looks for platinum to average $1,056 an ounce next year, while palladium averages $1,019.

“We think that platinum really starts coming into its own in the second half of 2018,” said Bart Melek, head of commodity strategy with TDS.

He cited continued strong economic activity in Europe, where diesel-powered cars requiring platinum are popular, and expectations for no meaningful growth in platinum-mining supply.

“One big reason we think that platinum outperforms a bit here is that it is just underperforming so badly,” Melek said.

“We’re in a situation where a majority of production is under water in terms of covering costs. In palladium, for the most part, everybody is making money,” he noted.

“We don’t think it [the palladium price] has a whole lot of room to grow. Meanwhile, platinum does,” Melek said.

Additionally, Melek described himself as upbeat about gold prices for 2018. And if gold rises, platinum tends to benefit more from spillover safe-haven demand than palladium. He also cited potential for a modest increase in platinum-jewelry demand, which tends to hinge on economic activity.

As 2017 winds down, there is increasing market conjecture about the day when the auto sector may switch over to electric vehicles, which would not need catalysts.

However, Melek pointed out, based on current production schedules, the composition of the auto fleet will not change quickly, meaning little impact during the next five to 10 years. In the meantime, he continued, there are likely to be increased loadings of platinum group metals in catalysts to meet higher anti-pollution rules in a number of nations.

Further, Melek added, many of the so-called electric vehicles are hybrids that would still use fossil fuels, meaning PGMs would still be needed. And, some analysts pointed out, increased development of fuel cells may well require more use of platinum.

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