Exchange-traded funds: Palladium holdings at new highs

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Holdings in palladium exchange-traded funds (ETFs) hit record highs this week after heavy inflows into two funds launched in March pulled in half a million ounces of metal in less than two months. Analysts expect holdings of palladium ETFs, which issue securities backed by the physical metal, to climb further as investors seek exposure to this year’s best-performing precious metal. Palladium has outperformed platinum this year both in rand and dollar terms, and earlier this month reached its best price compared with its sister metal since mid-2002. ETF holdings, as measured by Reuters, hit 2.271 million ounces on Friday, beating the previous high of 2.269 million ounces in 2012. Standard Bank’s AfricaPalladium ETF and Absa Capital’s New Palladium now hold 568 000 ounces of the metal. Mitsubishi analyst Jonathan Butler said: “For the remainder of this year, we expect… a very strong element of demand, and to push the palladium market even further into deficit.”

With supply constrained by the platinum belt strike and demand expected to continue growing, the metal’s market balance was expected to tighten, precious metals research firm GFMS said in a report last month. “We expect palladium to remain in deep physical deficit (this year) in the order of 1.3 million ounces… suggesting that, barring the unlikely event of major disinvestment, prices will remain well bid,” GFMS said. – Reuters

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