History of New York events
New York 2018
Since SFA (Oxford) launched The Palladium Standard in 2016, we have seen the price of this metal rise to over $1,000/oz. However, recently the palladium price has softened. Is this a pause and can we expect greater upside next year on firmer palladium demand and evolving powertrains? What are the impacts of recycling and exchange-traded fund (ETF) redemptions? How will cuts in mine supply from South Africa affect palladium demand going forward?
This event, held at the Penn Club in New York, examined the outperforming metals, ruthenium and iridium, in addition to palladium.
The ruthenium price has risen five-fold over the past 18 months, but what can now be expected of this versatile PGM? The iridium price has also seen a hike over the last 12 months, but is demand now easing? What percentage of current mine supply is at risk of closure?
These questions were addressed by Stephen Forrest, SFA (Oxford)'s Chairman, and Dr Jenny Watts, SFA (Oxford) Principal Analyst, with a 40-minute 'Metals of the moment' presentation followed by a 20-minute question and answer session covering the supply and demand drivers for palladium, ruthenium and iridium uptake.
Guest speaker: Andrew Hinkly, Managing Partner, AP Ventures, with a presentation on Investing in PGM powered technologies.
As cornerstone investors, Anglo American Platinum, the world's leading primary producer of PGMs, and the Public Investment Corporation (PIC), the largest Investment Fund Manager in Africa, had recently announced the launch of AP Ventures. AP Ventures invests in pioneering technologies and businesses that harness the unique chemical and physical properties of PGMs, helping these ventures to become commercially viable. At the same time, this represents an exciting step towards developing new markets for PGMs.
In a 40-minute presentation with a 20-minute question and answer session, Andrew Hinkly, Managing Partner at AP Ventures, highlighted how PGMs power numerous advanced technologies vital to solving global challenges, such as sustainable energy integration, growing resource scarcity and rapidly changing demographics. He explained how industries utilising PGM-powered technologies have a competitive advantage which drives superior returns and underpins the investment opportunity.
This was an exclusive opportunity to engage with Andrew Hinkly and hear about AP Ventures and the new markets for PGMs at a crucial time for the industry.
Each attendee received a complimentary copy of The Palladium Standard which, along with SFA (Oxford)’s view on the palladium, platinum and rhodium markets and the key industry data and indicators for the past 12 months, included an article on the potential impact of President Trump’s sanctions, entitled PGMs – casualties of a US-China trade war?.
We will, of course, continue to produce The Platinum Standard to coincide with our Oxford Platinum Lectures in May.
The future of cities and mobility solutions
SFA's new study, The Drivers for Mobility Change, was presented to delegates at the event. The report covers more than 800 pages of research and analysis, and demonstrated to attendees the depth of SFA (Oxford)'s research on future mobility scenarios and their impact on PGMs.
New York 2017
Is history about to repeat itself? Another boom-bust sequence in the offing.
In 2017 SFA (Oxford) envisaged even more happening in palladium substructures and price angles...
...so to illuminate matters, The Palladium Standard had contributions from major players in the palladium market. Each attendee at our event received a complimentary copy along with our latest view on the market.
Added to this was a well-informed presentation by Beresford Clarke, Managing Director of SFA (Oxford), on the palladium market, its fundamentals and price drivers under the agenda 'Electrified cars (hybrids) and their impact on palladium'.
Growing hybrid demand for palladium
Hybrids are growing in popularity and palladium is literally riding on the back of their success. Hybrids are generally accepted to be a stepping stone to full electrification, but while pure EV infiltration remains low at about 1% of global vehicle production, hybrids can be the magic bullet to achieve ever stringent emissions standards over the medium term.
A hybrid car combines more than one means of propulsion, the most popular combination is a gasoline combustion engine mated to an electric motor. Having a combustion engine means off course a PGM loaded catalytic converter is required – primarily using palladium.
Hybrids are generally accepted to be a stepping stone to full electrification, but while pure EV infiltration remains low at about 1% of global vehicle production, hybrids can be the 'magic bullet' to achieve ever stringent emissions standards over the medium term.
New York 2016
When we launched The Palladium Standard in September 2016 the palladium price was $660/oz, but by July 2017 the price was up 30%. SFA (Oxford)’s vision was to put palladium firmly on the map with a dedicated annual review devoted to the metal. Our event was a huge success with attendance up 60%, highlighting specific interest in palladium. Our first edition reinforced the positive fundamentals of the market and included a timely, guest contribution from Mick McMullen, President and CEO of Stillwater Mining Company.
From humble beginnings to 10 moz
Since the global financial crisis, palladium has become the demand outperformer, even higher than platinum and rhodium demand combined. With palladium demand exceeding 10 million ounces for the first time in 2015, SFA (Oxford) has been proved to be accurate in its forecast of the change in the platinum-palladium ratio from >1.8:1 to 1.5:1.
With palladium demand outpacing that of other PGMs, stock exports from Russia drying up, palladium’s exposure to gasoline engines in catalytic converters and the rapid emergence of China, market deficits have opened up. Despite there being a great deal of palladium stock to absorb, the bull case has been compelling. It is not surprising therefore that the generally long-held premium that platinum has enjoyed over palladium has narrowed.
The Palladium Standard was launched in New York because North America was the major consumer of palladium at just over a quarter of global demand. More than 80% of the palladium used in North America is used in autocatalysts. Palladium's popularity was ignited in the late 1980’s when a US car manufacturer developed a method to substitute some platinum for palladium in gasoline catalysts.
However, from the beginning, autocatalysts were overloaded with palladium, replacing platinum by around a 2:1 ratio. The palladium price rallied on stronger demand, erratic and constrained supply from Russian exports, some panic buying and speculation. All a perfect bubble which had to burst - as it did in 2001.
The automakers then introduced a means of reducing palladium loadings, replacing platinum by a more reasonable 1:1 ratio and it took some time for palladium to recover. In fact, it took 14 years for North American demand to recover back over 2 million ounces per annum.
The percentage of total palladium usage is increasingly for autocatalysts. Over the long run, palladium demand has grown from <10% market share to 77% of total demand and this market share will continue to increase. This is very similar to rhodium - both metals are now beholden to the automotive industry.
One of the reasons for palladium’s recent success is rising demand in China. Vehicle production there has grown from less than 10 million units a year before the financial crisis to 24 million units in 2015 - the market has grown by over 2 million units a year.
In the past, SFA (Oxford) has seen some extreme price moves by rhodium with the volatility of less than 10% suddenly surging to over 120%, or more regularly over 40%. However, as Rhodium is a smaller market, such moves are to be expected. Nonetheless, as palladium is becoming mainly reliant on one industry, it could be more susceptible to sudden technology change or even positive announcements regards emissions legislation or loadings which could increase price volatility as available stocks deplete. This is positive news for investors, but maybe not so for other market participants, particularly end-users and recyclers.
Autocatalyst success comes at a price, with higher metal prices forcing substitution and lower demand with boom and busts for price-elastic non-auto end-uses for palladium in electronic, dental and jewellery sectors. Only chemical demand has grown steadily with palladium's wealth of applications and the megatrends of population growth and the rise of the middle classes.
Palladium Market Reports
SFA (Oxford) provides regular market intelligence reports on palladium as well as in-depth studies on recycling, metal flows and price setting. Our most popular palladium reports are:
- The PGM quarterly report
- The Long-Term PGM Market Outlook report
- The 2040 PGM Market Outlook report
Discover more on SFA (Oxford)'s palladium market reports.
Please let us know if you would like to attend SFA (Oxford)'s September 2019 event in New York. Complete this short form to join our mailing list and we will keep you up to date with developments.