"This owed much to a relatively subdued 2 percent rise in global
fabrication, which nonetheless reached an 11-year high," the consultancy
said in a statement.
This featured a solid 5 percent lift for palladium autocatalyst
demand -- also an 11-year peak -- driven by firmer demand in gasoline
applications and substitution-related gains at the expense of platinum.
However, the survey also showed that these gains were partially
offset by weaker offtake in most other areas of palladium fabrication
demand, with the heaviest losses having emerged in jewelery, principally
in China, which declined to an eight-year low.
As a result, this relatively modest increase in global palladium
fabrication was comfortably outstripped by a 5 percent rise in supply,
which climbed to a record.
"In addition to a lift of more than 3 percent in mine production,
this was a function of robust gains in autocatalyst recycling which
continued to benefit from the historical escalation in palladium
autocatalyst demand during the late 1990s/early 2000s," the consultancy
said.
Despite a smaller gross deficit, substantial liquidations from
exchange-traded fund (ETF) holdings and a reduction in investors' long
positions on futures markets, palladium prices still posted a record
high annual average in 2011 of $734.
This followed a dramatic rise in prices during late 2010 and early 2011. And even though ast year saw palladium prices fall by 20 percent on an intra-year
basis, the decline was limited to the last four months, and driven very
much by profit taking, Thomson Reuters GFMS said.
"Palladium prices are also likely to benefit from the favourable
investor climate towards precious metals, while the downside may be
limited as palladium's demand base in autocatalyst is less exposed to
Europe and is quite broadly based geographically," Philip Klapwijk,
Global Head of Metals Analystics at Thomson Reuters GFMS, said in a
statement.
"Overall, therefore, palladium is forecast to trade in a range of $575 to $775 through to end-2012."
The most actively traded palladium contract on the Comex closed down $8.10 to $661.35.
http://www.ibtimes.com/articles/337443/20120504/palladium.htm
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