Palladium Climbs to Highest Price Since 2001 on Increased Investor Demand

By Claudia Carpenter and Sungwoo Park:

Palladium rose to a nine-year high in London and New York on speculation that reduced currency values and steps to revive growth will accelerate demand for the metal.

ETF Securities Ltd.'s ETFS Palladium Trust, started in January, has bought 44,437 ounces of the metal in the past three days, according to information on the company's website. That's 7 percent of global investment demand for all of last year, based on Johnson Matthey Plc estimates. Palladium is also needed by car manufacturers to make catalytic converters.

"Palladium is in demand because of a recovery in industrial demand and as a store of value for investors," said Daniel Briesemann, an analyst at Commerzbank AG in Frankfurt. "Not only gold and silver are profiting from investment demand but also platinum and palladium."

Palladium for immediate delivery rose as much as $16.50, or 2.8 percent, to $602.75 an ounce, the highest since June 27, 2001, and was up 2.7 percent at $602 an ounce at 12:20 p.m. in London. Palladium for December delivery advanced 2.8 percent to $606.25 an ounce on the New York Mercantile Exchange, the highest price for a most-active contract since June 28, 2001.

Palladium has climbed 48 percent this year, more than double the gain in platinum and exceeding advances in gold and silver.

Palladium may rise to $700 an ounce over the next six to 12 months, Colin Fenton and Matthew Lehmann, analysts at New York- based JPMorgan Chase & Co., wrote in a report dated yesterday. There is "solid emerging-markets' physical demand for the auto sector," they wrote in the report.

Palladium is viewed as "the most likely" of the three major platinum-group metals, including platinum and rhodium, to return to deficit, Morgan Stanley said in a report on Oct. 5.

Russia may have exhausted state inventories of the metal, Norilsk Nickel said in May. Sales from state stockpiles reached 960,000 ounces last year, the third-biggest contributor to world supply after mine output from South Africa and Russia, according to Johnson Matthey.