Palladium May Gain from Yuan Revaluation
Source: TheStreet (6/22/10)
". . .uptrend in China's auto production will benefit palladium."
Palladium producers are poised to benefit from the increase in palladium prices.
China surpassed the U.S. to become the world's largest automobile market in 2009. Because the auto industry accounts for nearly half of the world's palladium demand, an uptrend in China's automobile production will benefit palladium.
Palladium and platinum are used in catalytic converter applications in automobiles. Palladium has been substituting for platinum as product differentiation is insignificant. However, price spreads between the two metals is quite substantial. Currently, palladium and platinum for spot delivery are trading around $484/oz. and $1,586/0z., respectively, on the NYMEX.
The palladium deficit is expected to elevate during 2010 due to China's demand, thereby supporting higher palladium prices.