Global Industries Keep Replacing Palladium with Platinum at a Record Pace

For the first time since 2018, a fundamental shift in the classic automotive industry caused palladium prices to drop below those of platinum. Faced with rising operating expenses and inflation in input prices, many have opted to use platinum as an alternative. As a result, there has been a significant and unprecedented change in the precious metals market, which has not been witnessed in over 5 years.

In a significant development, the price of palladium dipped below that of platinum last week, marking the first time since April 2018. On February 8, 2024, palladium experienced a 2.8% decline, reaching $869.6 per troy ounce, while platinum held steady at $874.5 per troy ounce. As of today, February 24, the corresponding front month futures are trading at $875.62/oz (for palladium) and $884.40/oz (for platinum).

In 2023, the World Platinum Investment Council (WPIC) reported a significant increase in the amount of palladium being replaced by platinum, with approximately 620,000 ounces being substituted, compared to 385,000 ounces in 2022. As a result, global palladium prices experienced a substantial decline of nearly 40% throughout the year. Looking ahead, the WPIC anticipates an even greater substitution of approximately 700,000 ounces in 2024. It is worth noting that this substitution process is far from straightforward, making these figures particularly remarkable.