Norilsk Nickel expects palladium shortage – Business – Kommersant

Analysts at Norilsk Nickel expect increased volatility in the platinum group metals market in 2023 due to supply disruptions. The company expects palladium shortages to widen next year on the back of increased automotive consumption and reduced supplies from South Africa.

Norilsk Nickel expects major supply disruptions in the global platinum group metals (PGM) market following a recovery in demand in the automotive industry. This is stated in a new review of the metals market, published on company website.

Several negative factors affect the global market: geopolitical uncertainty, disruptions in supply chains, tightening of the monetary policy of the largest central banks. These factors, combined with the shortage of semiconductors and coronavirus restrictions in China, may affect the industry next year, analysts at Norilsk Nickel believe. In addition, the decision of the London Platinum and Palladium Market (LPPM) to exclude from the Good Delivery list the Russian refineries that Nornickel uses to process its raw materials into refined palladium has led to a significant shortage of palladium in powder and bars with Good Delivery status. According to the company, there are serious risks of production disruption in South Africa, which is the second most important player in the pgm market after Russia. All this creates the prerequisites for high price volatility, which will harm all industries that consume PGM.

According to Norilsk Nickel forecasts, the global supply of palladium will decrease by 10%, which will lead to a deeper shortage in the market.

“We have revised our palladium market deficit forecast for 2022 from 0.1 Moz in our previous estimate to 0.6 Moz and expect the deficit to widen to 0.8 Moz in 2023,” the review said.

The platinum surplus of 0.9 million ounces in 2022 will shrink to near zero amid production shutdowns in South Africa due to technical difficulties, power outages and reduced secondary production of platinum from spent catalysts. In 2023, the platinum market will return to a moderate surplus of 0.3 Moz as production in South Africa stabilizes.

Platinum group metals occupy a key place in Norilsk Nickel’s revenue – 36% in the first half of the year.

Evgeny Zainullin