Investing/Stocks

[Carlin]

For Clues About Palladium, Look to… North Macedonia?

URL:
https://finance.yahoo.com/news/clues...063831900.html

David Fickling
January 20, 2020

(Bloomberg Opinion) -- “The Balkans” — according to remark often attributed to Winston Churchill — “produce more history than they can consume.” Precious-metal traders betting on the record surge in palladium prices might want to draw a similar lesson.

That’s because production and consumption of palladium and its sister-metal platinum in one tiny Balkan state are giving crucial clues to the way producers of automobile catalytic converters use the two elements. This in turn is likely to affect the path of prices for both metals.

As we’ve written, there are strong fundamental underpinnings to the extraordinary rally that’s seen palladium prices increase nearly fivefold in the past four years, at a time when platinum is up a mere 25%. Both metals have extensive industrial uses in the converters that strip carbon monoxide and nitrogen oxides from car exhausts. Supply and demand dynamics have conspired recently to push up palladium prices at the expense of platinum.

Sales of new diesel cars, which tend to use more platinum, have been hit by the aftermath of the diesel emissions-testing scandal, putting the preponderance of demand on palladium-heavy gasoline vehicles. At the same time, South Africa’s platinum-mining industry has been struggling with low profitability, which has helped to keep supply of its palladium byproduct back from the market. Meanwhile, vehicle-emissions standards have been tightening in Europe, China and other countries, increasing demand for catalysts to clear up exhaust fumes.

The normal solution to this sort of situation is substitution. Palladium had few uses until the rise of the catalytic converter in the 1970s pushed chemists to try it out as an alternative to platinum. At some point, the current price mismatch between the two metals should cause the pendulum to swing the other way, so that manufacturers reformulate their autocatalysts to use less palladium and more cheap platinum.

That’s the theory, at any rate. The question is whether substitution is actually happening.

Matthew Turner, a former precious metals analyst at Macquarie Group, has spotted one way for traders to keep an eye on that question. Johnson Matthey Plc, one of the world’s biggest producers of platinum-group metals, operates a major catalytic converter plant in Skopje, the capital of the Balkan republic of North Macedonia.

This offers a unique window into the generally secretive business of autocatalyst recipes. North Macedonia has no domestic supply of platinum-group metals, and local new-car sales amount to only a few thousand units a year. That’s handy, because the country breaks out the metals it’s importing in standard trade disclosures, giving investors a pretty good proxy for the proportions being used in Matthey’s emissions-control devices.

The figures won’t reassure palladium bears. If anything, matters are heading in the opposite direction. From a period a few years ago when the ratio between platinum and palladium imports was around 3:1, for much of the past year it’s tightened to around 1.8:1, implying a yet more palladium-dense catalyst mix. Trailing 12-month platinum imports in October, the last month for which data is available, were up just 3.9% from two years earlier; those of palladium were up 61%.

It would be wise to treat this information with a smidgen of caution. While catalysts are North Macedonia’s biggest export, the country still accounts for less than 10% of the global cross-border trade in such products — and that’s only a small part of the catalyst market as a whole, when you factor in domestic consumption.

The data also only tell you about the activity of one plant, which might not be representative of the industry as a whole. Importantly, the Skopje factory was set up to produce diesel catalysts, so gives us few clues as to what’s happening in the gasoline end of the autocatalyst market.

On top of that, Matthey is itself a major player in the platinum-group metals trade, and is no doubt wise to any efforts to use this data as a window on its commercial secrets. If it moves some excess palladium inventory to the Balkans, it’s not impossible that it could end up getting cheaper prices on its platinum from traders watching the North Macedonian trade figures — which could be useful, if you were planning to switch to a more platinum-dense catalyst mix.

[Carlin]

Breaking news: Oil CRASHES 30% over Saudi Arabia-Russia crude price war & coronavirus fears.

U.S. stock futures are in free fall Sunday evening. The oil industry is collapsing in real-time. Wow.


Oil Drops 31% in Worst Loss Since Gulf War as Price Fight Erupts

By Dan Murtaugh and Alfred Cang

March 8, 2020, 6:08 PM EDT Updated on March 9, 2020, 12:09 AM EDT
- Saudi Arabia makes deepest price cuts in at least 20 years
- Collapse of OPEC+ alliance triggers crude supply free-for-all

URL:
https://www.bloomberg.com/news/artic...premium-canada

Oil markets crashed more than 30% after the disintegration of the OPEC+ alliance triggered an all-out price war between Saudi Arabia and Russia that is likely to have sweeping political and economic consequences.

Brent futures suffered the second-largest decline on record in the opening seconds of trading in Asia, behind only the plunge during the Gulf War in 1991. As the global oil benchmark plummeted to as low as $31.02 a barrel, Goldman Sachs Group Inc. warned prices could drop to near $20 a barrel.

The cataclysmic collapse will resonate through the energy industry, from giants like Exxon Mobil Corp. to smaller shale drillers in West Texas. It will hit the budgets of oil-dependent nations from Iraq to Nigeria and could also reshape global politics, eroding the influence of countries like Saudi Arabia. The fight against climate change may suffer a setback as fossil fuels become more competitive versus renewable energy.

“It’s unbelievable, the market was overwhelmed by a wave of selling at the open,” said Andy Lipow, president of Houston-based energy consultancy Lipow Oil Associates LLC. “OPEC+ has clearly surprised the market by engaging in a price war to gain market share.”

Hammered by withering demand due to the coronavirus, the oil market is sinking deeper into chaos on the prospect of a supply free-for-all. Saudi Arabia slashed its official prices by the most in at least 20 years over the weekend and signaled to buyers it would ramp up output -- an unambiguous declaration of intent to flood the market with crude. Russia said its companies were free to pump as much as they could.

[Risto the Great]

Yep. A bloodbath today in Australia.
I bought more.

[Phoenix]

Originally Posted by Risto the Great

Yep. A bloodbath today in Australia.
I bought more.

A few smart picks during this madness could be quite profitable in the near future...make sure you buy up the dunny paper manufacturers Risto...nothing like the perfect storm of - primal fear and irrationality to spook the markets and the 'mum and dad investors' getting their news and views from Facebook...

[Risto the Great]

Interestingly, in Japan, one of the few stocks to go up was a food company. They make rice products and are longer life products. They went up 4% while everything else was falling. So, yes, it fits with all this other irrationality. Might be the types of companies to look at. But definitely some bargains in the blue chip dividend paying companies right now.

[Gocka]

The bear market plus oil being so cheap is a great for my large short position in Tesla. Ill wait another week before closing that out then I will buy a large position in Disney, and a couple more yet to be determined. I think Ill make out like a bandit.

[Risto the Great]

I think the bear market is now a meerkat market.
Blood on the floor .... I bought up too early!
Tempted to grab more.

[VMRO]

Originally Posted by Risto the Great

I think the bear market is now a meerkat market.
Blood on the floor .... I bought up too early!
Tempted to grab more.

I believe it has further to go.

Tempted to buy Westfarmers & maybe A2 milk shares if they drop a bit more.

[Gocka]

Definitely way too early. Friday will be brutal next week will probably be bad too. I would wait until the the week after that to see how things are going. Even then I worry that we will have a nice bounce as the Corona situation improves but then when the true economic impact is realized and quantified the market will take an even bigger dump. We were already in euphoric territory because of central banks providing very low interest rates. The market was bound to correct even before the virus fears. Ride the short term bounce post virus then go to cash and wait for the second negative wave to pass.

[Phoenix]

Originally Posted by Risto the Great

I think the bear market is now a meerkat market.
Blood on the floor .... I bought up too early!
Tempted to grab more.

We are yet to reach peak madness...the US is only just ramping up, wait for the riots and people taking up arms and using them, that will mostly happen in the US, when downtown LALA land is burning and looting becomes the norm you'll know you're at rock bottom...