Palladium reached the high-water mark in trading on Wednesday at $1,502 an ounce. It has since retreated to $1,472.14 as of noon on Thursday, according to CNBC.
Palladium is a silvery-white metal, one of six of the platinum-group metals — along with ruthenium, rhodium, osmium, iridium and platinum itself. But about 80 percent of palladium is used in manufacturing exhaust systems in cars and trucks.
Palladium is also used in electronics, dentistry, medicine, hydrogen purification, chemical applications, groundwater treatment and jewelry. Palladium is a key component of fuel cells, which react hydrogen with oxygen to produce electricity, heat and water.
Automotive industry is biggest user
Palladium is used in catalytic converters. The devices are installed between the engine and the tailpipe on vehicles. By using the device, they will convert as much as 90 percent of the hydrocarbons, carbon monoxide, and nitrogen dioxide in automobile emissions into less harmful nitrogen, carbon dioxide and water vapor.
One thing creating a rising demand for palladium is stricter emission standards in the European Union, China and other developing nations. Diesel cars are also being phased out, adding to the demand for the metal’s properties.
Palladium is also rare and is mined primarily in Russia and South Africa, Ontario and Montana. Much of the time, palladium is extracted as a secondary metal from operations focusing on extracting nickel or platinum.
The problem with palladium
Issues with the precious metal all boil down to a matter of supply and demand. While the demand for the metal continues to rise as automakers respond to stricter emission standards, the supply has not been keeping up with orders.
Today, there are about 110,000 tons of platinum-group metals being held in reserve around the world, with nearly 70,000 tons held in South Africa, according to Fortune. At the same time, recycling has become an important source for the metal.
According to the USGS, almost 121 tons of platinum, palladium, and rhodium were recovered globally from scrap in 2017.
The shortage of palladium has also led to a rise in crime, with brazen criminals stealing catalytic converters from vehicles. Fortune reports that a catalytic converter from a Toyota Prius has about two grams of harvestable palladium, which is worth about $450 at a scrapyard.
“We’ve had three different sets of parking lots hit, and they usually get four or five vehicles each time,” police Lt. Chuck Nagle in Vestavia Hills, Ala., told the Wall Street Journal. “They’re usually taking them out of state and getting anywhere from $150 to $200 at a clip. … They’re not selling the part. They’re selling the metal.”
