Analys
Extremely tight platinum and palladium markets

The South African platinum mining industry has been affected by strikes for more than ten weeks now. Because stocks are dwindling, the mining companies concerned are finding it increasingly difficult to fulfil their contractual delivery obligations. The situation as regards palladium is dominated by concerns about how Russia might react if the West were to impose further-reaching sanctions on the country. At the same time, demand on both markets is robust, driven by the automotive industry. The situation appears to be tightening noticeably, which in our opinion suggests that platinum and palladium prices will rise.
Platinum came under pressure from the weak gold price in March and declined noticeably as a result. For a time it dropped below the $1,400 per troy ounce mark to a six-week low. Palladium fared somewhat better and trended sideways while fluctuating significantly. For the first time since August 2011, it actually exceeded the $800 per troy ounce mark for a while, though it was unable to maintain this level (Chart 1). We believe that both precious metal prices are too low from a fundamental viewpoint given the risks to supply. In this Commodity Spotlight we will be assessing the supply situation in South Africa, the world’s biggest platinum producer and the world’s number two palladium producer, as well as taking a look at Russia, the biggest supplier of palladium.
According to figures from Johnson Matthey, South Africa produced 4.12 million ounces of platinum and 2.35 million ounces of palladium last year, thus accounting for 72% of global platinum mining production and 37% of global palladium mining production (Chart 2). Palladium is generally mined together with platinum. However, a strike has been underway in the South African platinum mining industry since 23 January. The radical AMCU (Association of Mineworkers and Construction Union) called its members out on strike to lend emphasis to its calls for wage hikes. The union, which was established in 1998 and formally registered in 2001, represents the majority of workers in the platinum mining industry and has meanwhile overtaken the more moderate union NUM (National Union of Mineworkers) in terms of membership. The world’s three biggest platinum producers are affected: Anglo American Platinum, Impala Platinum and Lonmin, 87% of whose workers are union members. Accounting for 66% of these, the AMCU predominates (Chart 3). Over 70,000 workers went out on strike when called upon to do so. The strike is the biggest to hit the South African mining sector since the Apartheid regime ended in 1994. 350,000 workers took to the streets in 1987 to protest for better working conditions, though this strike was brought to an end after around three weeks and cost the mining companies around ZAR 250 million at the time, according to the NUM.
Union and companies still far apart
The AMCU is calling for producers to increase wages significantly, its core demand being that entry-level salaries be doubled to ZAR 12,500 per month. Originally, the AMCU urged the mining companies to meet its demands immediately, though it has meanwhile shown itself willing to “make some concessions”. AMCU has “eased” its core demand in two stages, with the result that it now wishes to see wages doubled within four years. For their part, the companies have offered staggered wage increases over the course of three years – 9% in the first year, 8% in the second and 7.5% in the third. In February, the rate of inflation in South Africa was 5.9%. In other words, the two parties still maintain positions that are very far apart. To date, the state mediator engaged to help (CCMA – Commission for Conciliation, Mediation and Arbitration) has failed to bring the two parties any closer together. In fact, talks were actually suspended for a time because the mediator saw no possibility of agreement.
Politicians exercise restraint ahead of elections
So far, politicians have chosen not to intervene in the strike, clearly because of the upcoming elections in South Africa. Parliamentary elections will be held on 7 May, with presidential elections to follow in the second half of the year. The mine workers make up a major group of voters which neither the governing party ANC (African National Congress) nor the opposition parties wish to alienate. Polls indicate that the ANC is likely to win the elections, though it remains to be seen whether this will subsequently result in the necessary reforms being implemented which would also steer the mining industry into calmer waters. Recently, the South African finance minister played down the strike’s negative impact on the local economy, claiming that the current strike is causing less damage than the industrial actions taken two years ago. In 2012, a series of strikes cost gold and platinum producers more than ZAR 16 billion.
High revenue losses for companies and lost earnings for workers
By their own account, the mining companies concerned are losing 9,900 ounces of platinum production every day – 4,000 ounces at Anglo American Platinum, 2,800 ounces at Impala Platinum and 3,100 ounces at Lonmin. Assuming that work generally continues in the mines seven days a week, the producers have thus lost nearly 700,000 ounces of production since the beginning of the strike. The companies claim that they have lost revenues totalling over ZAR 11 billion as a result. So far, workers who are not being paid while they are out on strike have lost earnings of around ZAR 5 billion.
Company stocks dwindling
Although production has been at a standstill since the beginning of the strike, the companies have been able at least partly to fulfil their delivery obligations by drawing on stocks. By their own account, the producers had piled up considerable stocks in the run-up to the strike, which industrial sources estimated would last two months. The situation is not the same in all the companies, however. Anglo American Platinum had for example announced at the end of March that it had used up half of its 430,000 ounces of stocks up to that point, saying that material would be bought on the market if stocks ran out. By contrast, Impala Platinum had already declared “force majeure” in early March and has no longer been able to guarantee deliveries since the beginning of April. Impala is likewise considering buying in material on the market in order to meet its contractual obligations. Lonmin had also downwardly revised its sales forecasts for this year at an early stage.
Negative long-term impact cannot be excluded
Even if the strike can be brought to an end, it will take weeks if not months before platinum production achieves its pre-strike levels again. After all, the damage in shafts and galleries resulting from the lack of use first has to be identified and, most importantly of all, safety has to be restored. In some cases the companies are already talking about irreparable damage and are considering shutting down individual shafts entirely. There are also likely to be some redundancies because the companies claim that they will otherwise no longer be able to operate at a profit. This could spark renewed protests and set in motion a vicious circle which would harm the entire country.
Concers about supply outages in Russia
As far as palladium is concerned, we need to take a look at Russia. According to data from Johnson Matthey, Russia accounted for 42% of worldwide palladium supply in 2013 (primary production and reserve sales together totalling 2.7 million ounces) and for 14% of global platinum production (780,000 ounces), making the country the largest producer of palladium and the second-largest producer of platinum. The situation here is dominated by concerns about the extent to which possible sanctions imposed by the West on Russia could hit this sector and how Russia might react to further-reaching sanctions against its economy. That said, there are no signs so far that deliveries from Russia are at risk. According to the UK’s Financial Times, however, Norilsk Nickel, the world’s largest palladium producer, is currently negotiating longterm palladium and platinum supply contracts with Chinese and Japanese buyers. Although this might not mean anything, it could perhaps be viewed as a not particularly subtle hint to the West.
Robust demand from the automotive industry
Driven by the automotive industry, demand for both platinum and palladium is robust. March saw the seasonally adjusted annualized vehicle sales rate in the US rise to 16.33 million units, the highest figure since May 2007. At 3.16 million units, car sales in China in January and February combined were a good 11% up on the same period last year. It would therefore seem that the 2014 target of an increase in sales of up to 10%, set by the China Association of Automobile Manufacturers, is achievable. The European auto industry may also have bottomed out, for car sales in February increased year-on-year for the sixth consecutive month (Chart 4).
New palladium ETF on the market
When it comes to investment demand, market participants evidently switched their allegiance from palladium to platinum in the first quarter. While the palladium ETFs tracked by Bloomberg recorded outflows of 51,900 ounces, the platinum ETFs saw inflows of 53,600 ounces. That said, the trend could soon be reversed in the case of palladium (Chart 5), for South African investment bank Absa Capital launched its long-awaited palladium ETF at the end of March. The ETF is listed on the Johannesburg Stock Exchange and solely sourced with palladium from South Africa. If the palladium ETF follows the same course as Absa Capital’s platinum ETF, which was launched at the end of April 2013, a great deal of supply could be stripped from the market. Within just four months of its launch, the platinum ETF became the world’s biggest platinum ETF and at the end of March had a market share of 37% with over 952,000 ounces. Holdings in all platinum ETFs combined are equivalent to more than five months of global mining production, while holdings in palladium ETFs equate to nearly four months of global production.
Higher prices expected during the course of the year
In our opinion, risks to supply in conjunction with robust demand point to higher platinum and palladium prices. According to data from Johnson Matthey, the supply-demand situation was already tight on both markets last year, the global platinum market showing a supply deficit of 605,000 ounces in 2013 and demand outstripping supply on the global palladium market by 740,000 ounces. Assuming the supply problems are not resolved in the near future and demand remains robust, the situation on both markets will doubtless tighten further. By year’s end we continue to envisage a platinum price of $1,600 per troy ounce, while palladium is likely to be trading at $825 per troy ounce.
Analys
An Israeli attack on Iran moves closer as Trump’s bully-diplomacy has reach a dead end

Brent rising a meager 1% as CNN says Israel prepares to attack Iran. Brent crude traded in a narrow range of USD 64.85 – 66.0/b yesterday and ended down 0.2% to USD 65.38/b along with US equities down 0.4% while it got some support from a 0.3% softer USD. Iran’s Khamenei yesterday that it was outrageous for the US to say it won’t allow Iran to enrich uranium, that the US should not talk nonsense and that Iran’s uranium enrichment is absolutely non-negotiable. These statements did little to the oil price yesterday. But CNN reporting today that Israel is preparing to strike nuclear facilities in Iran is making Brent rise 1% to USD 66.1/b. Either the impact on the oil market in case of an attack is assumed to be low or the probability for an attack is assumed to be low. Because a 1% gain is not much when we are talking bombs in the Middle East major oil producing region.

Trump bully-diplomacy has reach a dead end as Iran clings to its nuclear capabilities. Iran will naturally never give up its ability to produce a nuclear weapon after having seen what Russia has done to Ukraine when they gave up their nuclear weapons and what the US previously has done to Iraq and Libya. Israel can never accept that Iran can have nuclear weapons. And there is the standoff. So far the market is not pricing in much risk for an Israeli strike on Iran. Trump is probably not supporting Israel with respect to an attack on Iranian nuclear facilities as it could drag the US into a wider war in the region. Israel however knows that the US will always have its back even if the US is not giving a green light for an attack. To our understanding it now takes very little time for Iran to produce weapons grade enriched uranium. That is something Israel cannot accept. Logic thus leads to the conclusion that Israel will strike Iranian nuclear facilities at some point given Khamenei’s explicit statement that Iran will continue its enrichment. The finer detail is however whether we are talking about nuclear power plant grade enrichment or weapons grade enrichment. Another close to certain point is that Iran will eventually make a nuclear bomb and there is essentially nothing Israel can do about it. Israel can either choose to accept that this will eventually be the outcome or they can try to prevent it or delay it as long as possible. The latter seems the likely first step. I.e. an eventual attack on Iranian nuclear facilities. Then the question is when. CNN reporting today that Israel is preparing an attack indicates that this could happen sooner rather than later.
US API yesterday released data indicating that US inventories of crude and products fell 2.1 mb (Crude + 2.5 mb, Gasoline -3.2 mb and Distillates -1.4 mb). That is a seasonally counter cyclical draw when US commercial inventories normally rise 3-6 mb per week. Surplus is not yet here. Actual data later today at 16:30 CET.
Normal weekly change in US commercial crude and products in mb/week. Week 20 highlighted.

Analys
A lower oil price AND a softer USD will lift global appetite for oil

Brent starting in read after a week of 2.4% tariff relief gain. Brent crude gained 2.4% (+USD 1.5/b) last week with a close of USD 65.41/b and traded the week in a range of USD 64.53 – 66.63/b. Price gains last week aligned with dissipating tariff angst as China – US trade tariffs were lowered to 10% and 30% respectively. Down from a staggering 125% and 145% though with the risk for a snap-back after 90 days. The low of the week coincided with rumors that an Iran – US nuclear deal was near at hand. But was later downplayed. Such a deal may not add all that much more oil to the market as most of Iran’s oil probably already is in the market through different pathways. Brent crude is pulling back 0.9% this morning to USD 64.9/b while the USD index is declining 0.5% as well. That is usually a positive for the oil price as it makes oil cheaper for all non-USD based consumers. US equity futures are also down 1% this morning. Chinese new and used housing prices fell 0.12% and 0.41% respectively last month with property investments down 10.3% YTD YoY. All weaker than expected. Chinese industrial production YoY however came in at 6.1% and better than the expected 5.7%. Overall a rather weak start of the week nonetheless.

While down this morning, Brent crude is surprisingly not shedding all that much value given the rather bearish backdrop of US equity futures in the red and everyone and their grandmothers forecasting doom and gloom for the oil price.
Speculators added 64 mb to net long positions in Brent crude and WTI over the week to last Tuesday. Most likely as a result of US-China tariffs being shifted down to livable levels. Most headlines and forecasts are however overall very bearish for oil. More oil from OPEC+ in the months to come coupled with expectations for a slowdown in global oil demand growth due to the US tariff trade war.
A lower oil price AND a softer USD will likely bolster global oil demand vs very bearish expectations. Global oil demand growth could surprise to the upside amid all the gloom. In EUR/b terms the the current price of Brent crude is now 22% lower than the average price in 2024. A softer oil price AND a softer USD is making oil considerably cheaper in the eyes of the global oil consumer ex-US. And that portion of global oil demand after all accounts for around 80% of global consumption. We could thus quickly see a Brent crude price down 30% versus 2024 average for 80% of the world’s consumers with a little further decline in USD-oil and the USD itself. This will likely help to boost oil demand globally. Remember also that a very important reason for why OPEC+ wanted to lift its oil production in May and June was to meet sharply stronger Middle East summer oil demand. A note on oil demand. India’s road fuel demand was up 5% YoY in April while its PMI rose to 58.2%. The IEA expects India oil demand to rise by only 2.3% to 5.77 mb/d YoY (+130 kb/d) while a 5% demand growth would yield a demand growth of 282 kb/d YoY.
OPEC+ has NOT abandoned market control. This is not 2014/15/16 or 2020. It is important to remember that the group has not abandoned its general plan of adding 2.2 mb/d from April 2025 to December 2026. The path will be decided on a monthly basis and can be moved both up AND down. The group has NOT abandoned market control. Though it is on a gradual pace to retake 2.2 mb/d of market share. US shale oil production has to stand back to make room and global consumers will respond with stronger demand growth in response to a lower oil price made additionally cheaper by a softening USD.
Brent crude forward curve in front-end backwardation. Surplus is not yet here.

Brent crude in USD/b. Little upside conviction to be found anywhere.

US oil drilling rig count fell by 1 last week to second lowest since December 2021. No real shedding of drilling quite yet. But we’ll likely see a drop of 5-10% over the coming months. It could drop as much as 5-10 rigs per week.

Net long speculative positions in Brent crude + WTI rebounded 64 mb to Tuesday last week.

Analys
Oil slips as Iran signals sanctions breakthrough

After a positive start to the week, crude oil prices rose on Monday and Tuesday, with Brent peaking at USD 66.8 per barrel on Tuesday evening. Since then, prices have drifted lower, declining by roughly 5% to around USD 63.5 per barrel – below where the week began during Monday’s opening.

Iran is currently in the spotlight, having signaled its willingness to sign a nuclear deal with the U.S. in exchange for lifting economic sanctions. Ali Shamkhani, a senior political, military, and nuclear adviser, spoke publicly about the ongoing negotiations. He indicated that Iran would commit to never developing nuclear weapons and could dismantle its stockpile of highly enriched uranium – provided there is immediate sanctions relief. While nothing is finalized, the rhetoric is notable and could theoretically lead to additional Iranian barrels entering the global market.
It’s worth recalling that in mid-March, Iran’s Oil Minister declared that the country’s oil exports were “unstoppable”, and that Iran would not relinquish its share of the global oil market – even in the face of new U.S. sanctions introduced earlier this year. In practice, however, this claim has proven exaggerated.
In February 2025, Iran’s crude production rose to 3.3 million barrels per day (bpd), staying above 3 million bpd since September 2023. Of this, approximately 1.74 million bpd were exported – primarily to Chinese private refiners (”teapots”). Early in the year, shipments to these teapots continued largely uninterrupted, as they have limited exposure to the U.S. financial system and remained willing buyers despite sanctions.
However, Washington’s “maximum pressure” campaign has gradually constrained Iran’s ability to ship crude to China. By March 2025, Chinese imports of Iranian oil peaked at approximately 1.8 million bpd. In April, imports dropped sharply to around 1.3 million bpd, reflecting stricter U.S. sanctions targeting Chinese refineries and port operators involved in handling Iranian crude. Preliminary data for May suggest a further decline, with Iranian oil arrivals potentially falling to 1.0–1.2 million bpd, as Chinese refiners adopt a more cautious stance.
As a result, any immediate sanctions relief stemming from a nuclear agreement could unlock an additional 0.8 million bpd of Iranian crude for the global market – an undeniably bearish development for prices.
On the other hand, failure to reach a deal would likely mean continued or even intensified U.S. pressure under the Trump administration. In a worst-case scenario – where Iran loses its remaining 1.0–1.2 million bpd of exports – and if Saudi Arabia or other major producers do not promptly step in to offset the shortfall, global oil prices could experience an immediate upside of USD 4–6 per barrel.
Meanwhile, both OPEC and the IEA expect the oil market to remain well-supplied in 2025, with supply growth exceeding demand. OPEC holds its demand growth forecast at 1.3 million bpd, driven mainly by emerging markets in Asia, the Middle East, and Latin America. In contrast, the IEA sees more modest growth of 740,000 bpd, citing macroeconomic challenges and accelerating electric vehicle adoption – particularly in China, where petrochemical demand is now the primary growth engine.
On the supply side, OPEC has revised down its non-OPEC+ growth estimate to 800,000 bpd, citing weaker prices and reduced upstream investment. The IEA, however, expects global supply to expand by 1.6 million bpd, led by the U.S., Canada, Brazil, Guyana, and Argentina. Should OPEC+ proceed with unwinding voluntary cuts, the IEA warns that the market could face a surplus of up to 1.4 million bpd in 2025 – potentially exerting renewed downward pressure on prices.
_______________
EIA data released yesterday showed U.S. Crude inventories unexpectedly rose 3.45 million barrels with a drop in exports and despite a larger than expected increase in refinery runs.
U.S. commercial crude oil inventories (excl. SPR) rose by 3.45 million barrels last week, reaching 441.8 million barrels – approximately 6% below the five-year seasonal average. Total gasoline inventories declined by 1 million barrels and now sit around 3% below the five-year average. Distillate (diesel) fuel inventories fell by 3.2 million barrels and remain roughly 16% below the seasonal norm. Meanwhile, propane/propylene inventories climbed by 2.2 million barrels but are still 9% below their five-year average. Overall, total commercial petroleum inventories rose by 4.9 million barrels over the week – overall a neutral report with limited immediate price impacts.


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