Despite the sanctions announced against Russia in many areas, Europe bought a record amount of Russian palladium in March, which is used in the production of catalytic converters. Foreign partners buy up all available volumes of metal from Norilsk Nickel, as Russia is difficult to replace in this market. The main deliveries took place in Germany and Italy.
According to Eurostat, EU countries bought 164 thousand troy ounces of palladium from Russia in March for 407 million euros. This is a monthly record purchase in terms of volume over the past 20 years. And this against the background of a closed sky for Russian aircraft, which traditionally (in the cargo compartments of passenger ships) transport palladium, writes Kommersant.
Despite all the efforts of western car manufacturers, palladium remains one of the most important metals in the production of converters: replacement with platinum would require significant investment in research and development.
The risks associated with palladium exports from Russia are pushing prices up – now the metal is trading at $2,000 an ounce, but in March the price reached historic highs of $3,289 an ounce amid fears of supply disruptions from Russia.
Global demand for palladium is expected to grow 3% to 10.3 Moz in 2022, driven by a partial recovery in the automotive sector. The supply of the metal will also grow slightly due to the recovery of production by Norilsk Nickel after the accidents that occurred in 2021. By 2030, Norilsk Nickel will be able to supply enough metal to the global market to produce 25-40 million converters.
Today, 80% of the world’s palladium is supplied by Russia and South Africa (Russia’s share is 40%). Because the deposits in South Africa are exhausted, Russian palladium cannot be replaced.
Palladium is most in demand in the automotive industry, where it is used in catalytic converters along with platinum. Palladium is more commonly used in gasoline engines, platinum in diesel engines. The average automotive catalytic converter uses 1-2 grams of palladium. The content is higher in hybrid cars.