Sanctions on Russian Seen Detrimental to Palladium Supplies

by on March 22, 2014 7:15 pm BST

Palladium seen the highest price levels since August 2011 on fears that newly placed sanctions on Russia will reduce supplies. Russia is currently the world’s largest supply of this industrial (and precious) metal that is largely used in pollution-control components in cars.

US President Obama announced a brand new set of sanctions on key Russian officials after President Vladimir Putin signed into law the annexation of Crimea. Analysts believe that if tensions increase, raw metal shipments could be affected, and traders are pricing in risk premium. Labor strikes for miners in South Africa continue and are adding additional worries about palladium supply.

According to commodity strategist Mike Dragosits, TD Securities, “economic sanctions will cripple supplies, and people are getting very concerned about that.” Dragosits see Putin’s unwillingness to step back from aggression as only fuel for the fire.

Palladium hit $800 per ounce before closing the week at $795. Year-to-date, palladium is up almost 10 percent and seeing the best annual start since 2010. Bloomberg data showed a 65 percent boost in trading above the 100-day average.