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Alternative Market Briefing

Hedge funds bullish on palladium prices as shortage looms

Tuesday, August 06, 2013

Precy Dumlao, Opalesque Asia:

Hedge funds are bullish on palladium’s prices as global financial firms like Morgan Stanley and Credit Suisse have predicted there will be a shortage of the metal.

A report by BusinessWeek said that Morgan Stanley had predicted that global demand for palladium would exceed the 1.33 million ounces to be produced this year. For its part, Credit Suisse said the shortage for the metal would last up to 2016, while research firm CPM Group said the deficit would take a decade to fill.

John Stephenson, who manages C$2.65bn at First Asset Investment Management Inc in Toronto, was quoted as saying, "The supply situation is potentially very bullish for palladium, so I am probably the most bullish on palladium amongst all commodities. Any time supply and demand are out of whack, we see prices swing."

Palladium rose 3.3% to $728 in London this year, says BusinessWeek. Prices are expected to reach $800 an ounce in Q1 of 2014, a 9.2% increase from its current level and further rise to $850 in 2015. Already, speculators, including hedge funds, have raised their bets on higher prices as car sales are expected to to rise. 67% of the palladium supply is used in auto-catalysts.

Data from the U.S. Commodity Futures Trading Commission (CFTC) showed that hedge funds and other speculators hold a net 22,970 palladiu......................

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