Följ oss

Analys

Short term recovery due for platinum and palladium

Publicerat

den

WisdomTree
WisdomTree

The green industrialised precious metals – platinum and palladium have started 2020 on a weak footing owing to the spread of the COVID–19 pandemic globally. The price decline for platinum, down-21.0%, has been more severe than palladium -6.83% since the start of 2020. Palladium and platinum are known to derive a large portion of their usage (accounting for nearly 34% and 84% respectively) from the auto industry.

Owing to their extensive use in vehicle auto catalysts, demand for platinum and palladium remains particularly sensitive to economic, industrial and market conditions. Falling demand from the global auto industry due to automotive shutdowns being imposed globally are denting sentiment towards both platinum and palladium. Platinum has a more diverse demand base compared to palladium. In addition to auto demand – jewellery, industrial and investment demand account for about 25%, 28% and 13% of platinum’s total usage, respectively.

However, amidst the COVID-19 crisis, both jewellery and industrial demand are expected to fall further but investment demand is likely to strength amidst the uncertainty. While the weakness on the demand side remains a key focus, we expect attention to increasingly start to shift to the supply side aiding a short-term price recovery.

Palladium versus platinum prices
Source: Bloomberg, WisdomTree, data available as of close 30 April 2020.

The slump in auto industry should start to recover in H2 as stringent lockdowns ease

The impact of the COVID-19 crisis on the global automobile industry has been severe as production and sales of motor vehicles have come to a sudden halt globally. In the first quarter of 2020, the EU commercial vehicle market contracted by 23.2% as a direct consequence of March’s substantial slowdown. In March 2020, demand for new commercial vehicles fell by 47.3% across the EU, as measures to prevent the spread of the coronavirus led to the suspension of production at auto manufacturers.

Meanwhile in China, where the epidemic peaked in February, the market is slowly returning to normality. The Chinese automotive market recovered significantly from its prior slump in March. As the China Association of Automobile Manufacturers (CAAM) reported on 10 April 2020, car sales increased more than fourfold (compared to February) to 1.04mn units. According to reports from the CAAM, the Chinese auto industry regained around 75% of its normal operating level in March. The CAAM expects the vehicle market to continue its recovery in the second quarter although full capacity is only likely to be reached again in the second half of the year. In Europe, assembly lines are now restarting production and the same is expected in North America around mid-May.

As lockdown measures start to ease gradually across the rest of the globe, we expect to see a gradual recovery in demand for the green metals from the auto industry in the second half of the year. However, we remain cautious of end-consumer demand which is anticipated to stay weak as consumer’s propensity to purchase cars will be lower due to the economic impact of the COVID-19 crisis on their purchasing power.

Global auto sales growth
Source: Bloomberg, WisdomTree, data available as of close 30 April 2020.

Supply side destruction is likely to have a bigger impact on platinum vs palladium

South Africa’s Platinum Group Metal (PGM) producers have been hit by severe disruptions since the lockdowns have been imposed in April. South Africa produces around 38% of palladium and 75% of platinum globally. In the past, the South African mining industry faced a range of health issues, including HIV infections, and such concerns have always posed a risk to supply. The five-week lockdown in South Africa ordered by President Ramaphosa is expected to come to an end in the coming days.

While producers are attempting to prepare themselves to restart production at the mines again, the police are preventing them due to the spread of COVID-19. This implies that the current market tightness will only last for short duration. However, the process of ramping operations back to normal is likely to take time even after the shutdown period. It is also hard to determine at this stage if a second wave of infections might trigger another round of shutdowns causing supply disruptions to linger for longer. Initially the mines are expected to be allowed to operate at 50% capacity.

Palladium normally occurs as a by-product of platinum mining (South Africa) or nickel mining (Russia). About 40% of palladium’s supply comes from Russia. Supply of palladium appears to be at less of a risk as the world’s largest palladium producer Nornickel from Russia expects the global palladium market to show a small supply surplus this year for the first time in eight years.

This is because demand for palladium has been impacted severely by the COVID-19 led crisis. Nornickel reduced its 2020 estimate of palladium consumption owing to weaker global car sales. Reflecting on 2011, Gokran, the Russian state reserve fund unexpectedly supplied about 750,000 ounces out of its own stockpile which was followed by three years of palladium’s price decline. The caveat is no one knows how big Gokran’s stockpile or whether they would use this current period of weak demand for palladium to build up stockpile.

No substitution so far, despite palladium’s price premium over platinum

The recent price correction has driven the palladium to platinum ratio down from its peak of 3.1x to 2.4x. Despite palladium’s price premium to platinum it is less likely for platinum to be substituted for palladium in auto catalysts. The chief reason for this is platinum’s lower thermal durability which curtails its use in the widespread adoption of three-way catalysts.

The implementation of Real-Driving Emissions (RDE) testing involves stricter test cycles with faster driving speeds and higher engine temperatures which poses technical hurdles to platinum’s adoption in the three-way catalysts. At high operating temperatures experienced in a gasoline car, platinum particles may sinter, resulting in loss of surface area and hence of catalytic activity according to Johnson Matthey. Compared to palladium-rhodium formulations, the effectiveness of platinum-containing catalysts tends to deteriorate more rapidly as they age. While there might be some near-term potential for platinum to substitute some of the palladium used in diesel catalyst, we do not see a substitution effect in gasoline catalysts this year.

Platinum and palladium have witnessed a sharp downward price correction in 2020 owing to weak sentiment emanating from dwindling demand in the auto industry. Intermediate supply disruptions should aid a short-term price recovery for the green metals. The roll out of more stringent emissions standards globally are also likely to require higher content of platinum and palladium per unit of vehicle which should help offset the impact of weaker demand from the auto industry. Platinum’s supply is more concentrated in South Africa due to which platinum appears more exposed to supply disruptions versus palladium. In addition, palladium derives most of its use from the auto industry in comparison to platinum has a more diversified demand base. Platinum stands to benefit more than palladium owing to the prospect of having a more diversified demand base coupled with the exposure to higher supply risks. 

Analys

OPEC+ in a process of retaking market share

Publicerat

den

SEB - analysbrev på råvaror

Oil prices are likely to fall for a fourth straight year as OPEC+ unwinds cuts and retakes market share. We expect Brent crude to average USD 55/b in Q4/25 before OPEC+ steps in to stabilise the market into 2026. Surplus, stock building, oil prices are under pressure with OPEC+ calling the shots as to how rough it wants to play it. We see natural gas prices following parity with oil (except for seasonality) until LNG surplus arrives in late 2026/early 2027.

Ole R. Hvalbye, Analyst Commodities, SEB
Ole R. Hvalbye, Analyst Commodities, SEB

Oil market: Q4/25 and 2026 will be all about how OPEC+ chooses to play it
OPEC+ is in a process of unwinding voluntary cuts by a sub-group of the members and taking back market share. But the process looks set to be different from 2014-16, as the group doesn’t look likely to blindly lift production to take back market share. The group has stated very explicitly that it can just as well cut production as increase it ahead. While the oil price is unlikely to drop as violently and lasting as in 2014-16, it will likely fall further before the group steps in with fresh cuts to stabilise the price. We expect Brent to fall to USD 55/b in Q4/25 before the group steps in with fresh cuts at the end of the year.

Bjarne Schieldrop, Chief analyst commodities, SEB
Bjarne Schieldrop, Chief analyst commodities, SEB

Natural gas market: Winter risk ahead, yet LNG balance to loosen from 2026
The global gas market entered 2025 in a fragile state of balance. European reliance on LNG remains high, with Russian pipeline flows limited to Turkey and Russian LNG constrained by sanctions. Planned NCS maintenance in late summer could trim exports by up to 1.3 TWh/day, pressuring EU storage ahead of winter. Meanwhile, NE Asia accounts for more than 50% of global LNG demand, with China alone nearing a 20% share (~80 mt in 2024). US shale gas production has likely peaked after reaching 104.8 bcf/d, even as LNG export capacity expands rapidly, tightening the US balance. Global supply additions are limited until late 2026, when major US, Qatari and Canadian projects are due to start up. Until then, we expect TTF to average EUR 38/MWh through 2025, before easing as the new supply wave likely arrives in late 2026 and then in 2027.

Fortsätt läsa

Analys

Manufacturing PMIs ticking higher lends support to both copper and oil

Publicerat

den

SEB - analysbrev på råvaror

Price action contained withing USD 2/b last week. Likely muted today as well with US closed. The Brent November contract is the new front-month contract as of today. It traded in a range of USD 66.37-68.49/b and closed the week up a mere 0.4% at USD 67.48/b. US oil inventory data didn’t make much of an impact on the Brent price last week as it is totally normal for US crude stocks to decline 2.4 mb/d this time of year as data showed. This morning Brent is up a meager 0.5% to USD 67.8/b. It is US Labor day today with US markets closed. Today’s price action is likely going to be muted due to that.

Bjarne Schieldrop, Chief analyst commodities, SEB
Bjarne Schieldrop, Chief analyst commodities, SEB

Improving manufacturing readings. China’s manufacturing PMI for August came in at 49.4 versus 49.3 for July. A marginal improvement. The total PMI index ticked up to 50.5 from 50.2 with non-manufacturing also helping it higher. The HCOB Eurozone manufacturing PMI was a disastrous 45.1 last December, but has since then been on a one-way street upwards to its current 50.5 for August. The S&P US manufacturing index jumped to 53.3 in August which was the highest since 2022 (US ISM manufacturing tomorrow). India manufacturing PMI rose further and to 59.3 for August which is the highest since at least 2022.

Are we in for global manufacturing expansion? Would help to explain copper at 10k and resilient oil. JPMorgan global manufacturing index for August is due tomorrow. It was 49.7 in July and has been below the 50-line since February. Looking at the above it looks like a good chance for moving into positive territory for global manufacturing. A copper price of USD 9935/ton, sniffing at the 10k line could be a reflection of that. An oil price holding up fairly well at close to USD 68/b despite the fact that oil balances for Q4-25 and 2026 looks bloated could be another reflection that global manufacturing may be accelerating.

US manufacturing PMI by S&P rose to 53.3 in August. It was published on 21 August, so not at all newly released. But the US ISM manufacturing PMI is due tomorrow and has the potential to follow suite with a strong manufacturing reading.

US manufacturing PMI by S&P
Source: Bloomberg
Fortsätt läsa

Analys

Crude stocks fall again – diesel tightness persists

Publicerat

den

SEB - analysbrev på råvaror

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.

Ole R. Hvalbye, Analyst Commodities, SEB
Ole R. Hvalbye, Analyst Commodities, SEB

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.

US DOE Inventories
US Crude inventories
Fortsätt läsa

Guldcentralen

Aktier

Annons

Gratis uppdateringar om råvarumarknaden

*

Populära