The recovery of the global auto industry will push the demand for palladium higher.
But the world's palladium resources are extremely limited. About 80% of the global palladium supply comes from just two countries: South Africa and Russia.
The largest palladium reserves in the world are in the Bushveld Complex in South Africa.
But half of the global supply of palladium comes from just three sources in Russia:
■Norilsk Nickel (OTCBB: NILSY)
■the Russian State Precious Metals and Gemstones Repository (Gokhran)
■the Russian Central Bank
Norilsk Nickel is the largest palladium producer in the world. Each year, the company produces about 2.5 million ounces of palladium — enough to satisfy a whopping 40% of total global demand.
But Norilsk's palladium production isn't enough to meet rapidly growing demand from the auto industry, so Russia fills the deficit from Gokran and the Russian Central Bank.
However, industry insiders are now suggesting that there will be no sales from Russia's palladium stockpiles in 2011, indicating that the country's supplies are nearing depletion.
Russia's giant palladium stockpiles nearly dried up
Director of Norilsk Nickel Anton Berlin noted in a presentation given at ETF Securities Ltd. that the consensus is there will be no sales of palladium from the Russian state stockpile next year.
The actual level of Russia's palladium stockpiles is a state secret, so Mr. Berlin had to be careful with his responses during the presentation...
He did point out that palladium sales from Russian stockpiles have been falling year after year. And he mentioned that stockpile sales are now a fraction of historic values — a clear indicator that Russia's palladium reserves are approaching depletion.
Wealthdaily.com
