Russia sanctions will worsen palladium’s volatility

Significance

Russia is responsible for 40% of newly mined supply and concerns about the physical availability of palladium sponge -- the powdered form of the metal used by industry -- are prompting stockpiling. Output from Russian miner Norilsk Nickel (Nornickel) fell by 8% in the first quarter while Amplats, South Africa’s largest producer, reported a 10% drop in palladium output.

Impacts

• China’s tighter emissions standards, together with the Real Driving Emissions tests it has planned for 2023, may boost palladium demand.
• The Global Palladium Fund, owned by Nornickel, is considering issuing asset-backed tokens; any war impact on this is unclear yet.
• Russia could choose to retaliate against sanctions by curbing palladium exports.