Standard Chartered: Palladium 'Set To Be Undersupplied Longer Term'

By Kitco News / June 12, 2017 / / Article Link

StandardChartered cites potential for a short-term correction in palladium, which hitits highest price since 2001 on Friday, but also anticipates the market willremain "undersupplied" for a long time. "The forward curve has moved into asteep backwardation in less than a week, while Nymex stocks have fallen totheir lowest since 2003," Standard Chartered says. Analysts say much of thetightness in the market is materializing in ingot premiums (bar demand), butdemand for sponge (primarily for industrial use) is also strong. "Feedbackduring Platinum Week indicated healthy demand for auto and industrial palladiumconsumption that resulted in smelting and refining capacity focusing on spongerather than ingot," analysts say. Meanwhile, last year hefty net redemptions byphysically backed exchange-traded products - totaling 637,000 ounces in 2016 --boosted the supply of bars to the market. However, ETP outflows have slowed sofar this year, analysts say. Standard Chartered says "supply and demanddynamics suggest that the market is not only in deficit this year (minus563,000 ounces) but - in the absence of Russian state stock releases andelevated auto-catalyst demand - is set to be undersupplied longer term."

By Allen Sykoraof Kitco News;

BBH: Markets ToFocus On Fed View Of Economic Challenges'

Monday June 12, 2017 07:53

Marketparticipants look for the Federal Open Market Committee to hike U.S. interestrates by 25 basis points this week, and assuming this materializes as expected,the main focus of markets will become how officials view some slowing ofeconomic growth and any hints on what they will do with the Fed balance sheet,says Brown Brothers Harriman. "Ironically, the third hike since the U.S.election last November is so greatly assumed that it is not the most importantelement of the FOMC meeting. However, if it is not delivered, that wouldindeed overshadow everything else," BBH says. Still, the "simple, even ifunpleasant, truth" is that economic recovery from typical first-quarterweakness has been disappointing, with the Fed's preferred core PCE deflatordrifting lower for three consecutive months, BBH points out. "The mostimportant part of the outcome of the FOMC meeting is what it reveals about howofficials see these challenges," BBH says, commenting that the market "is notconvinced that there will be another rate hike this year" after this week."Investors also will focus on indications about the coming new balance-sheetregime, where the Fed will not simply roll over all maturing issues," BBH says."In effect, it will unwind the swap that has been dubbed QE [quantitativeeasing]. The Fed swapped reserves for Treasury bonds and mortgage-backedsecurities. Officials want to make the process as least disruptive aspossible."

By Allen Sykora

For Kitco News Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in precious metal products, commodities,securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.
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