For the Quarter Ending September 2024
North America
The North American palladium market experienced significant volatility in Q3 2024. August saw a sharp 7.8% decrease in spot market prices, while September witnessed a notable surge following the Federal Reserve's unexpected 50 basis point rate cut, which typically supports commodity prices. Supply faced considerable challenges, with North American output projected to be 6% lower and contributing to a 4% decline in global primary production.
The market was further impacted by delays in Russian smelter upgrades and subdued recycling activities despite a projected 3% increase in secondary supply. Demand showed weakness throughout the quarter, with overall global demand forecasted to decrease by 1% to 9.33 million ounces. The automotive sector, a key demand driver, experienced significant decline with new vehicle sales dropping 12.3% in September to 1,172,101 units.
This decline was attributed to fewer selling days and reduced consumer spending amid inflation and rising interest rates. The quarter recorded a slight decrease of 4% from the previous quarter. The quarter ended with prices at USD 959/OZ of Palladium Metal DEL Alabama (USD/oz) (USA), reflecting the overall downward trajectory in pricing for the region.
Asia-Pacific
The APAC region experienced mixed trends in the palladium market during Q3 2024. In China, despite sluggish automotive demand, prices rose in August, supported by global supply constraints. The Chinese market saw positive momentum in September, with gasoline car sales increasing by over 100,000 units from August, bolstered by government vehicle trade-in initiatives, despite a weak Manufacturing PMI remaining in contraction.
Malaysia faced more challenging conditions, with palladium prices falling 7.8% in August due to reduced primary production and automotive sector weakness. Proton, the national carmaker, reported mixed sales results, while the manufacturing sector showed continued weakness with flat new order growth and declining production levels. Both markets were influenced by global supply dynamics, including a 4% decrease in primary production due to delays in Russian smelters and reduced North American output.
Overall demand is projected to decline by 1% to 9.33 million ounces, primarily due to the automotive industry's shift toward electric vehicles and rising interest rates. The quarter recorded a slight decrease of 4% from the previous quarter. The quarter ended with prices at USD 1084/OZ of Palladium Metal Ex-Shanghai (USD/oz) (China), reflecting the overall downward trajectory in pricing for the region.
Europe
In Q3 2024, palladium prices in Europe faced challenges, highlighted by a 7.8% drop in the German spot market during August, largely due to a 4% decrease in primary production from Russia and North America. Despite a projected 3% increase in secondary supply from recycling, demand is forecasted to decline by 1% to 9.33 million ounces, driven by reduced automotive needs as the industry shifts towards electric vehicles and rising interest rates. The US Manufacturing Index also indicated a slowdown, reflecting a broader decline in manufacturing health.
By September, palladium prices surged 8.11%, aided by a Federal Reserve rate cut that weakened the dollar and boosted commodities. However, Germany’s automotive sector reported a 7.0% year-over-year decline in new passenger car registrations, with gasoline vehicle sales dropping significantly.
The region is navigating a complex landscape, with supply shortages due to production challenges in key areas like Russia and South Africa impacting market dynamics. The quarter recorded a slight decrease of 4% from the previous quarter, ending with prices at USD 1123/OZ of Palladium Metal FD Ruhr (USD/oz), reflecting the overall downward trajectory in pricing for the region.
