Crispus Nyaga

Crispus Nyaga is a Nairobi-based trader and analyst. He started trading more than 7 years ago as a student. He has published in several reputable websites like The Street, Benzinga, and Seeking Alpha. He focuses mostly on G20 currencies, commodities like Crude oil and Gold, and European and American large-cap companies.

Platinum is an important precious metal in the automotive industry. It is used as a catalytic converter in vehicles. As a converter, the metal is used to reduce carbon emissions in automobiles. Indeed, most of the palladium is used for this purpose.

The metal is found deep inside the earth’s crust and is mined by a few companies. Unlike other metals, palladium is not mined whole. Instead, it is a byproduct of the platinum and nickel mining. As a result, most of the metal comes from Russia and South Africa. The biggest miner of palladium in the world is Norilsk Nickel, a Russian company that controls more than 40% of the market.

The reason why the price of palladium has continued to rise is that more people are now moving to petrol cars after the Volkswagen carbon emission scandal a few years ago. As the world transitions to a more carbon-neutral place, the demand for these cars is increasing. In fact, the new carbon standards in China and Europe favor the metal.

The biggest risk to the price of palladium is the fact that most people are now considering moving to electric vehicles. Cars like Tesla and Nissan leaf have become more popular. In addition, charging systems have become more popular. In the just concluded auto show in Detroit, all the manufacturers that exhibited said they were investing billions to electric vehicles. Warren Buffet on the other hand has invested billions in lithium extraction as he tries to capture the market. Therefore, since almost 80% of all palladium mined is used for this purpose, it potentially places the metal at a lot of risks.

To survive, the palladium companies must now transition to the jewellery industry when its price is still hot. This is how the price of diamond has remained high due to De Beers focus on the price.  

In recent days, the price of palladium has declined from a high of $1440 to a low of $1337. In the coming days, traders may  watch out the ongoing negotiations between US and China. A positive outcome will likely provide a boost to its price.

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