Analys
Going green? The unexpected investments helping to reduce vehicle emissions


Globally about 15% of the world’s Greenhouse Gas (GHG) emissions come from the transportation sector. Despite improving fuel efficiency in cars over the past seven decades, the fact that more people in the world use cars means that global emissions from the transport sector continue to rise. However, pollution abatement equipment can help reduce emissions from cars. Autocatalysts are a key technology in this regard.
Platinum and palladium in autocatalysts

An autocatalyst is a device installed in internal combustion engine cars that converts harmful pollutants into safer gases. Platinum group metals (PGM) including platinum, palladium and rhodium are key ingredients in the autocatalysts that generate this chemical conversion. Autocatalysts were first introduced in the mid-1970s and today, are used in almost all internal combustion engine vehicles (including hybrid vehicles). In addition, fuel cell vehicles also use platinum (not palladium or rhodium) as the main catalyst in the reactions to produce electricity and water from hydrogen fuel and water.
How important are autocatalysts for PGM demand?
In 2019, automobiles accounted for 34% of platinum demand and 84% of palladium demand. So, the auto industry is the key driver of demand for both platinum and palladium.
Vehicle sales versus regulation
Tightening emission regulations generally increases the demand for the platinum group metals. Demand for platinum group metals will also vary with the volume of vehicle sales. Historically it has been emission regulation that has had a greater influence on demand. According to World Platinum Investment Council’s calculations, global vehicle sales between 1990 and 2019 rose by 1.6 times whereas the combined demand for platinum, palladium and rhodium in cars rose by 6.2 times. The fact that the rise in automobile platinum group metal demand was more than the increase in car sales indicates that higher loadings have been the chief driver of demand growth. Emission regulations are continuing to tighten globally for both passenger and commercial vehicles.
Gasoline vs. diesel cars
Today, there are higher loadings of palladium in gasoline autocatalysts and higher loadings of platinum in diesel autocatalysts. However, both autocatalysts carry some loadings of each metal. The catalytic efficiency of each metal is influenced by engine temperature, fuel type, all fuel quality and durability of the autocatalyst’s washcoat. Diesel engines operate at lower temperatures than gasoline engines and run with a leaner gas stream containing lots of oxygen. Under these conditions, platinum is a more active catalyst for the conversion of carbon monoxide (CO) and hydrocarbons (HC) to harmless emissions. However, the addition of some palladium to the platinum catalyst can improve its thermal stability. This is an advantage when reducing diesel particulate matter from the exhaust. This process involves trapping the particulate matter in a filter and then raising the temperature of the system to oxidise the matter to CO2. At these higher temperatures, palladium improves the thermal durability of the catalyst, helping it perform optimally for the lifetime of the vehicle.
Diesel cars falling out of favour
Europe is the largest diesel passenger car market in the world. In most of the rest of the world, gasoline cars dominate. However, even in Europe, diesel cars have fallen out of favour following ‘Dieselgate’ and tightening particulate emissions standards across Europe, where diesel cars do not perform as well as their gasoline equivalents (see figure 01 below).

Platinum versus palladium price
In 2010, platinum used to trade close to 3 times the price of palladium. Dieselgate accelerated the trend of rising palladium relative to platinum prices. Today, platinum trades below half the price of palladium. Palladium’s growing demand and tightening supply have been a boon for prices (see figure 02 below).

Economical to substitute?
With such a wide price differential between platinum and palladium, it’s a natural question to ask if platinum can be substituted for palladium? Industry experts including Johnson Matthey, believe there is some limited scope for substitution. Not necessarily in gasoline cars but more in terms of substituting out palladium in diesel cars with higher loadings of platinum. However, auto manufacturers are notoriously secretive about their technologies which makes it difficult to comment on what scale this will occur. In addition, it is rumoured that auto manufacturers are using their scarce engineers to develop electric vehicles and so auto manufacturers are averse to divert them to PGM substitution projects.
Trucking industry
While globally more passenger cars use gasoline than diesel, trucks generally use more diesel. Emission standards for trucks are tightening. Notably in India the government has tightened regulations to broadly match European standards in 20205. China will implement similar standards phased between 2021 and 2023. This is likely to be a strong catalyst for platinum demand.
Car sales in COVID-19 era
Passenger car sales had fallen hard during the COVID-19 pandemic, but as lockdown conditions ease, car sales appear to be rebounding strongly in China, Europe, and US (see figure 03 below). China and US are predominantly gasoline markets so the rebound in sales there mainly helps boost palladium prices. The rebound in European car sales should also help platinum prices.

The concentration in supply
Supply in both platinum and palladium is highly concentrated. South Africa accounts for nearly 70% of platinum’s global supply while South Africa and Russia collectively provide around 70% of palladium supply globally. While platinum is expected to be in a slight supply surplus this year, palladium continues to be in an acute supply deficit with demand continuing to grow and supply relatively stable.
Conclusions
Both platinum and palladium are important materials for pollution abatement technology in cars. Platinum, which has been heavily utilised in diesel passenger cars, has fallen out of favour in recent years. However, with tightening regulations for commercial vehicles globally we are likely to see that demand rise. Palladium, which has seen growing demand and is in a supply deficit is likely to see constructive fundamentals for years to come.
Analys
Crude stocks fall again – diesel tightness persists

U.S. commercial crude inventories posted another draw last week, falling by 2.4 million barrels to 418.3 million barrels, according to the latest DOE report. Inventories are now 6% below the five-year seasonal average, underlining a persistently tight supply picture as we move into the post-peak demand season.

While the draw was smaller than last week’s 6 million barrel decline, the trend remains consistent with seasonal patterns. Current inventories are still well below the 2015–2022 average of around 449 million barrels.
Gasoline inventories dropped by 1.2 million barrels and are now close to the five-year average. The breakdown showed a modest increase in finished gasoline offset by a decline in blending components – hinting at steady end-user demand.
Diesel inventories saw yet another sharp move, falling by 1.8 million barrels. Stocks are now 15% below the five-year average, pointing to sustained tightness in middle distillates. In fact, diesel remains the most undersupplied segment, with current inventory levels at the very low end of the historical range (see page 3 attached).
Total commercial petroleum inventories – including crude and products but excluding the SPR – fell by 4.4 million barrels on the week, bringing total inventories to approximately 1,259 million barrels. Despite rising refinery utilization at 94.6%, the broader inventory complex remains structurally tight.
On the demand side, the DOE’s ‘products supplied’ metric – a proxy for implied consumption – stayed strong. Total product demand averaged 21.2 million barrels per day over the last four weeks, up 2.5% YoY. Diesel and jet fuel were the standouts, up 7.7% and 1.7%, respectively, while gasoline demand softened slightly, down 1.1% YoY. The figures reflect a still-solid late-summer demand environment, particularly in industrial and freight-related sectors.


Analys
Increasing risk that OPEC+ will unwind the last 1.65 mb/d of cuts when they meet on 7 September

Pushed higher by falling US inventories and positive Jackson Hall signals. Brent crude traded up 2.9% last week to a close of $67.73/b. It traded between $65.3/b and $68.0/b with the low early in the week and the high on Friday. US oil inventory draws together with positive signals from Powel at Jackson Hall signaling that rate cuts are highly likely helped to drive both oil and equities higher.

Ticking higher for a fourth day in a row. Bank holiday in the UK calls for muted European session. Brent crude is inching 0.2% higher this morning to $67.9/b which if it holds will be the fourth trading day in a row with gains. Price action in the European session will likely be quite muted due to bank holiday in the UK today.
OPEC+ is lifting production but we keep waiting for the surplus to show up. The rapid unwinding of voluntary cuts by OPEC+ has placed the market in a waiting position. Waiting for the surplus to emerge and materialize. Waiting for OECD stocks to rise rapidly and visibly. Waiting for US crude and product stocks to rise. Waiting for crude oil forward curves to bend into proper contango. Waiting for increasing supply of medium sour crude from OPEC+ to push sour cracks lower and to push Mid-East sour crudes to increasing discounts to light sweet Brent crude. In anticipation of this the market has traded Brent and WTI crude benchmarks up to $10/b lower than what solely looking at present OECD inventories, US inventories and front-end backwardation would have warranted.
Quite a few pockets of strength. Dubai sour crude is trading at a premium to Brent crude! The front-end of the crude oil curves are still in backwardation. High sulfur fuel oil in ARA has weakened from parity with Brent crude in May, but is still only trading at a discount of $5.6/b to Brent versus a more normal discount of $10/b. ARA middle distillates are trading at a premium of $25/b versus Brent crude versus a more normal $15-20/b. US crude stocks are at the lowest seasonal level since 2018. And lastly, the Dubai sour crude marker is trading a premium to Brent crude (light sweet crude in Europe) as highlighted by Bloomberg this morning. Dubai is normally at a discount to Brent. With more medium sour crude from OPEC+ in general and the Middle East specifically, the widespread and natural expectation has been that Dubai should trade at an increasing discount to Brent. the opposite has happened. Dubai traded at a discount of $2.3/b to Brent in early June. Dubai has since then been on a steady strengthening path versus Brent crude and Dubai is today trading at a premium of $1.3/b. Quite unusual in general but especially so now that OPEC+ is supposed to produce more.
This makes the upcoming OPEC+ meeting on 7 September even more of a thrill. At stake is the next and last layer of 1.65 mb/d of voluntary cuts to unwind. The market described above shows pockets of strength blinking here and there. This clearly increases the chance that OPEC+ decides to unwind the remaining 1.65 mb/d of voluntary cuts when they meet on 7 September to discuss production in October. Though maybe they split it over two or three months of unwind. After that the group can start again with a clean slate and discuss OPEC+ wide cuts rather than voluntary cuts by a sub-group. That paves the way for OPEC+ wide cuts into Q1-26 where a large surplus is projected unless the group kicks in with cuts.
The Dubai medium sour crude oil marker usually trades at a discount to Brent crude. More oil from the Middle East as they unwind cuts should make that discount to Brent crude even more pronounced. Dubai has instead traded steadily stronger versus Brent since late May.

The Brent crude oil forward curve (latest in white) keeps stuck in backwardation at the front end of the curve. I.e. it is still a tight crude oil market at present. The smile-effect is the market anticipation of surplus down the road.

Analys
Brent edges higher as India–Russia oil trade draws U.S. ire and Powell takes the stage at Jackson Hole

Best price since early August. Brent crude gained 1.2% yesterday to settle at USD 67.67/b, the highest close since early August and the second day of gains. Prices traded to an intraday low of USD 66.74/b before closing up on the day. This morning Brent is ticking slightly higher at USD 67.76/b as the market steadies ahead of Fed Chair Jerome Powell’s Jackson Hole speech later today.

No Russia/Ukraine peace in sight and India getting heat from US over imports of Russian oil. Yesterday’s price action was driven by renewed geopolitical tension and steady underlying demand. Stalled ceasefire talks between Russia and Ukraine helped maintain a modest risk premium, while the spotlight turned to India’s continued imports of Russian crude. Trump sharply criticized New Delhi’s purchases, threatening higher tariffs and possible sanctions. His administration has already announced tariff hikes on Indian goods from 25% to 50% later this month. India has pushed back, defending its right to diversify crude sourcing and highlighting that it also buys oil from the U.S. Moscow meanwhile reaffirmed its commitment to supply India, deepening the impression that global energy flows are becoming increasingly politicized.
Holding steady this morning awaiting Powell’s address at Jackson Hall. This morning the main market focus is Powell’s address at Jackson Hole. It is set to be the key event for markets today, with traders parsing every word for signals on the Fed’s policy path. A September rate cut is still the base case but the odds have slipped from almost certainty earlier this month to around three-quarters. Sticky inflation data have tempered expectations, raising the stakes for Powell to strike the right balance between growth concerns and inflation risks. His tone will shape global risk sentiment into the weekend and will be closely watched for implications on the oil demand outlook.
For now, oil is holding steady with geopolitical frictions lending support and macro uncertainty keeping gains in check.
Oil market is starting to think and worry about next OPEC+ meeting on 7 September. While still a good two weeks to go, the next OPEC+ meeting on 7 September will be crucial for the oil market. After approving hefty production hikes in August and September, the question is now whether the group will also unwind the remaining 1.65 million bpd of voluntary cuts. Thereby completing the full phase-out of voluntary reductions well ahead of schedule. The decision will test OPEC+’s balancing act between volume-driven influence and price stability. The gathering on 7 September may give the clearest signal yet of whether the group will pause, pivot, or press ahead.
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