Skip to content
Subscriber Only
Shelley Goldberg

Palladium Rally Is About More Than Just Autos

Geopolitical risk has a role, too.
North Korea's missile launches are a factor.

North Korea's missile launches are a factor.

Photographer: Jung Yeon-Je/AFP/Getty Images

Palladium has been on a tear this year. Its spot price increased 45 percent year on year in the first half of 2017, and it now trades at a 16-year high. Although the rally has largely been attributed to the strong demand from the automotive industry, there’s a geopolitical risk premium baked into the price.

Approximately 67 percent of palladium produced is used in catalytic converters, which convert up to 90 percent of the harmful gases in automobile exhaust to less noxious substances. Global auto sales, up 4 percent for the year, are driven by a global increase in SUV sales, the ongoing shift from diesel to gasoline engines in Europe (diesel engines alternatively use platinum), and tightening emission legislation.