Palladium Surge Felt on Chicago Streets as Thieves Plunder Cars

(Bloomberg) -- Investors aren’t the only ones who have noticed palladium’s surge this year.

To appreciate the impact of the recent jump in prices, one need look no further than the streets of Chicago. A police locale put out a bulletin on Oct. 23 alerting residents to thefts of catalytic converters, vehicle pollution-control devices that contain palladium. About 75 percent of palladium demand is related to the production of auto-catalysts, Societe Generale SA said in a note.

The price of palladium has climbed as robust U.S. auto sales add to demand, with supplies of the metal expected to tighten further. Palladium has surged about 43 percent this year, outperforming precious metals including gold, silver and platinum and fueling demand in the scrap market. 

“When you see prices rally and then some thefts going on, it’s generally about price and availability,” Peter Thomas, senior vice president at Zaner Group in Chicago, said in a telephone interview. “Usually it’s someone who finds a friendly recycler that won’t ask any questions. Thieves slide under the car with a hacksaw.”

The metal last month eclipsed the price of platinum, which helps to reduce smog from diesel vehicles, for the first time since since 2001.

“The big question is when substitution in the auto-catalyst sector starts to kick in,” analyst Robin Bhar, a London-based metals analyst at SocGen, said in a report, referring to the possible substitution of palladium with other metals.

To contact the reporter on this story: Susanne Barton in New York at swalker33@bloomberg.net.

To contact the editors responsible for this story: James Attwood at jattwood3@bloomberg.net, Joe Richter, Steven Frank

©2017 Bloomberg L.P.