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The palladium price climbs as supply fears grow

by , 12 June 2014

Today, marks 20 weeks to the day since the strike by members of the Association of Mineworkers and Construction Union (AMCU) downed tools over wage demands at the world's top three platinum producers. The price of palladium has been rising steadily since the beginning of the strike. And this week, the metal showed a spectacular rally. Let's take a closer look at what's going on…

The palladium price is up 20% this year

Yesterday, the palladium price hit a high not seen since the beginning of 2001, reports MoneyWeb. Investors pushed the price of palladium higher as worries heighten over supply.

So far in 2014, “palladium has risen 20%,” adds MoneyWeb. The strike affecting Anglo American Platinum, Impala Platinum and Lonmin has taken “out a significant portion of the world’s output in platinum group metals (PGMs)”.

Holdings of platinum and palladium backed exchange traded funds “are at records,” according to Bloomberg. South Africa is the world’s largest “producer of platinum and second largest for palladium”.

So far, the strike has “cost about 30% of the year’s output, leading to heavy reliance on stockpiles,” notes Mining Weekly.

As talks deadlocked, palladium rallied

This rally in PGM prices comes as the latest bout of talks came to an end on Monday. The newly appointed mining minister and his team vacated talks on Monday evening after the union and platinum producers continue to disagree over a new wage deal.

And since this latest round of talks ended, rumours abound that the platinum producers will have to resort to job losses as their losses escalate.

To date, “producers have lost about R22 billion in revenue,” adds Bloomberg. This makes the strike the “longest and costliest mining strike” in South African history.

As supply fears grow, and if the strike continues, perhaps it won’t be long until the prices of PGMs rise further.

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The palladium price climbs as supply fears grow
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