Palladium, the ‘Tesla Stock of Commodities,’ Smashes Record Again
A “Made in Russia” engraving sits on a palladium ingot following manufacture at the JSC Krastsvetmet non-ferrous metals plant in Krasnoyarsk, Russia. (Photographer: Andrey Rudakov/Bloomberg)  

Palladium, the ‘Tesla Stock of Commodities,’ Smashes Record Again

(Bloomberg) -- No commodity is benefiting from the deadly coronovirus outbreak more than palladium.

Futures contracts for the precious metal surged as much as 8.1% to a record as Wall Street fled stocks. Investors are searching for safe havens after Apple Inc. warned that the virus and efforts to contain it would have its sales missing forecasts.

“Palladium has been unbelievable – it’s like the Tesla stock of commodities,” Edward Meir, an analyst at ED&F Man Capital Markets, said by phone. “Prices are caught up in the rally in precious metals. Whenever these metals rally palladium tends to move as well, but by a greater magnitude.”

The rally in metals gathered pace around 10 a.m. as gold advanced above $1,600 an ounce. Over that full hour, volume for palladium was more than six times the average in the past 100 days for that time of day, according to data compiled by Bloomberg. Palladium delivered a 77% return over the past year, the biggest among 45 raw materials on the DCI BNP Paribas Enhanced Index.

Palladium, the ‘Tesla Stock of Commodities,’ Smashes Record Again

Palladium futures for March delivery climbed 7.8% to settle at $2,497.60 an ounce at 1:01 p.m. on the New York Mercantile Exchange. Prices kept rising after the market closed Tuesday, touching $2,504.50, the highest in records going back three decades. The market was closed on Monday for a U.S. public holiday. In the spot market, the metal also reached an all-time high.

Gold futures for April delivery rose 1.1% to $1,603.60 an ounce, the highest close for a most-active contract on the Comex in New York since 2013. The tally of outstanding contracts for the metal is more than 30 times the size of palladium.

Palladium’s stellar performance has been driven by expectations that stricter Chinese environmental standards will spur higher loadings of the material in cars, draining global supply that’s already struggling to meet demand.

Production will trail consumption by 1.9 million ounces this year, wider than the 1.1 million ounce-deficit last year, Anglo American Platinum Chief Executive Officer Chris Griffith said in a presentation.

©2020 Bloomberg L.P.

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