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South Africa Mine Closure Helps Palladium ETF Shine | ETF Trends

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Palladium exchange traded fund jumped Wednesday, with palladium prices enjoying their best single-day price gain in two decades, after a major South African miner shutdown operations due to the coronavirus outbreak.

The Aberdeen Standard Physical Palladium Shares ETF (NYSEArca: PALL), which seeks to reflect the performance of the price of physical palladium, advanced 21.9% Wednesday as the palladium spot price gained 19.7% to $2,332.7 per ounce.

South African President Cyril Ramaphosa announced a 21-day closure for the mining sector on Monday, and the closure will take affect midnight, Thursday, Kitco reports.

This poses a major supply side issue for the palladium market as South Africa accounts for 75% of the global platinum supply and 38% of the global palladium supply.

“We believe this might provide significant support to Platinum Group Metals prices in the short term,” Dmitry Glushakov, Head of Metals & Mining Research at VTB Capital, told Reuters. “The country accounts for some 70% of global platinum mined supply and 35% of palladium, with a 21-day lockdown possibly resulting in a 4% and 2% of 2020 supply reduction respectively.”

Meanwhile, the Aberdeen Standard Platinum Shares ETF (NYSEArca: PPLT) was 4.1% higher Wednesday as the spot platinum price gained 4.8% to $747.1 per ounce.

“This is just further supply disruption in the precious metals market and will continue to support prices for platinum and palladium,” Ole Hansen, head of commodity strategy at Saxo Bank, told Kitco.

Steven Dunn, head of exchange traded funds at Aberdeen Standard Investments, said as the demand for palladium continues to outstrip supply, an interruption to the supply chain, even if temporary, puts a strain on an already tight market.

“Palladium has had a supply deficit for the past 8 years and expected to continue into 2021,” Dunn told ETF Trends. “While some of the effects may be muted because of the global slowdown of car manufacturing (primary consumer of palladium), it does highlight the knock-on effect of COVID-19.”

Aberdeen Standard Physical Palladium Shares ETF

For more information on the palladium markets, visit our palladium category.

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