Palladium recorded a fifth straight year of gains in 2020 and the rally shows no signs of slowing down. Greater restrictions on air pollution and a likely resumption of travel following the passage of the coronavirus pandemic are expected to boost demand for the metal used in auto parts. Stricter issuance rules are expected to push palladium prices up, especially given new standards in China, the second-largest consumer of metal behind the United States, says Steven Dunn, head of exchange-traded funds at Aberdeen Standard Investments. To comply with these standards, all new cars in China must be fitted with “good quality catalytic converters,” which means around 30% more palladium per vehicle, he says. “As countries continue to tighten emissions standards, palladium should be a beneficiary.” “As countries continue to tighten emissions standards, palladium should be a beneficiary.” – Steven Dunn, Aberdeen Standard Investments Palladium is primarily used in the catalytic converters of gasoline vehicles, which transform the most harmful pollutants in car exhaust gases into more environmentally friendly compounds like carbon dioxide and water, Dunn said. Palladium prices therefore have a strong correlation with the auto industry, which is expected to rebound in 2021, he says. Car and Driver magazine estimated that new vehicle sales in the United States were down 14.9% to 15.5% to about 14.5 million in 2020, bringing sales to the lowest level since 2012. However , the automotive enthusiast publication noted that a sales recovery had started. in summer and continued until December, amid an increase in Covid-19 cases across the country. Palladium PAH21, -2.20% PA00, -2.20% prices ended 2020 with a gain of around 29%. It hit a record settlement of $ 2,711.70 an ounce on February 27, 2020, but suffered a 48% drop from that level to mark its lowest settlement of the year on March 18, at 1,419.80 $. On Wednesday, the metal stood at $ 2,448.10, less than 10% below the record. Palladium prices have been increasing aggressively for several years, supported by an “acute imbalance between supply and demand, alongside the tightening of automobile emission standards”, ahead of the pandemic’s effects on demand in 2020, says Chris Blasi, President and President of Neptune Global. He expects prices this year to trade between $ 2,250 and $ 3,000, which would be a new record, with prices likely averaging around $ 2,710. Biden’s incoming administration is expected to be “environmentally focused and join the Paris Climate Agreement,” he said. “Such a position should further increase the demand for essential elements to achieve pollution control goals.” At the same time, palladium supplies have been in deficit for a decade, and that is unlikely to change anytime soon, he says. Meanwhile, the global distribution of the Covid-19 vaccine may impact palladium prices because “if more people start to resume a certain level of travel, the mode of transport most likely to be used will be the car. Says Ed Egilinsky, Managing Director and Head of Alternatives at Direxion. A “reopening of the global economy will be a key driver of this take shape and potentially lead to a significant spike in auto sales.” Other lockdowns or additional strains of the virus, on the other hand, could lead to supply constraints in the palladium market, he says. This could be the result of mining disruptions, but these constraints could also be offset by a decrease in automotive demand. Egilinsky says it’s possible to see palladium prices reach new highs in 2021, especially if there is a global recovery, a pickup in automotive demand, and more regulated global emission standards, but that ” may need to coincide with some level of supply disruption for this to happen. the story unfolds. “.