April 11, 2022

Last Friday, the London Platinum and Palladium Market (LPPM) barred both Russian state-owned platinum and palladium producers, Krastsvetmet and Prioksky Plant of Non-Ferrous Metals from the exchange. This move blocks those producers from delivering to the world’s largest platinum and palladium market. Roughly 25% of the global palladium supply to the London market, or approximately 102 mt, will be affected by this decision, according to market participants cited by Reuters. London is the world’s largest platinum and palladium market. In 2020, Russia was the world’s largest palladium miner, and the second largest platinum producer. CME Palladium futures, the benchmark for US palladium prices, rallied to $2,423/troy oz or 9.0% on Friday, and up another 4% today (7:20AM CST).

Consumers who are concerned about their palladium input costs should consider financial swaps or purchasing call options. Such positions are standard for consumer hedging, but they can result in opportunity costs or cash costs if metal prices decline. Please contact AEGIS for specific strategies that fit your operations. (4/11/22)

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