Palladium price increases following trading suspension in London

Palladium prices rose again following the London market’s suspension of two state-owned Russian refiners, contributing to concerns about potential supply disruptions from the primary palladium-producing country. 

Prices increased up to US$2372.00 an ounce on April 17, with traders fearing that the surge could worsen over the next few weeks. This surge comes after Russia’s invasion in Ukraine and the sanctions that followed the conflict. 

Palladium prices hit an all-time high of US$3,442.47 on March 7, and are up 24% this year.

On Friday, April 8, the London Platinum and Palladium Market (LPPM) announced that the Gulidov Krasnoyarsk Non-Ferrous Metals Plant "Krastsvetmet" and Prioksky Plant of Non-Ferrous Metals would both "no longer be accepted for LPPM Good Delivery into the London/Zurich Bullion market until further notice." The suspension would take immediate effect.

This move blocks platinum and palladium produced by these Russian refiners from trading in London after April 8, although the products that they produced while accredited would remain eligible to trade.

As the two following most significant producers of palladium after Russia, miners and refineries in South Africa and North America stand to gain from LPPM’s decision to boycott Russian platinum and palladium. 

CEO of South Africa’s Anglo American Platinum (Amplats), Natascha Viljoen said last week that Amplats has received enquiries from manufacturers and carmakers looking for palladium following Western sanctions on Russian refineries and miners.

Palladium users with no existing relationships with the company have reached out to Amplats about “potential alternative sources of palladium,” Viljoen told Reuters in an interview on the sidelines of the PGMs Industry Day, a platinum group metals (PGMs) mining conference in Johannesburg.

"Where we can accommodate them [new customers] after looking after our long-term customers, we will obviously try as much as possible," Viljoen said. However, she added that "we can't make any firm commitments."

As miners typically use long-term contracts, surplus supply is rare.

The CEO said that it would take at least five years for South Africa to step up its palladium production to replace Russia’s production, but the amount may never cover Russia’s palladium.

Russian metal can reach the market via other routes, like China, so the supply chain is more likely to shift rather than Russian supply fully terminating, she said.

The sanctions on Russia may end up in a premium on South African palladium, while there may be a discount on palladium being sold into China, Viljoen said.

Majestic Corporation has been a leading precious metals recyclers, non-ferrous metals and Catalytic converter provider for around three decades. With a presence in the United States, United Kingdom, Malaysia, Italy, Mexico, Australia, Hong Kong and more, as well as a network of precious metals refineries around the world, we work with major customers and partners in a transparent and discrete manner and only offer the highest quality services at competitive prices. 

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