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Palladium advances 9% on US Sanctions worries

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NEW YORK (Scrap Register): Palladium rose 9% last week on worries about potential U.S. sanctions against key producer Norilsk Nickel, even though such sanctions may never come about since the U.S. has few alternative sources to obtain palladium, according to Mitsubishi.

Palladium rose 9% last week. Russia’s Norilsk Nickel is the world’s largest producer of palladium, accounting for around 40% of the world’s annual mine supply.

“While so far Norilsk Nickel itself has not been placed under sanctions, fears that the company could be sanctioned in future – and any related disruption to the palladium market – appear to have stimulated renewed investor and industrial buying interest,” Mitsubishi added.

Still, Mitsubishi expresses doubt that the U.S. will impose sanctions against Norilsk, since nickel and palladium are more strategic metals than aluminum and there is limited U.S. production to cover any supply gaps.

“Around a third of U.S. demand for palladium currently comes from metal imported directly from Russia, and Russian-branded metal is important in global supply chains for auto catalysts and other fabricated products,” Mitsubishi noted.

A ban on trading with Norilsk, or Norilsk-branded metal, would have profound implications for global carmakers and other industrial users, and the risk of damage to U.S. industry from this may stay the hand of the Treasury Department.

Nonetheless, the tail risk of this occurring in the current uncertain climate still remains and should keep palladium prices well bid as industrial users and investors alike move to secure their requirements.

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