The Impact of COVID-19 On the Platinum and Palladium Market
Variations In Supply and Demand
The adverse effects left behind by the COVID-19 pandemic are still haunting global economies. Likewise, COVID-19 has affected precious metal companies; the supply and demand market of metals such as palladium and platinum undergo variations due to lockdowns and mine closures.
Since platinum is used in motor cars as a catalyst, its impact on the automotive industry has led to a fall in production of vehicles of around 18% and about 13% in demand.
Therefore, the need for platinum fell by 7%, and supply decreased by 20% in 2020. Besides, the price of palladium skyrocketed from less than $800/ ounce in 2018 to $2,875.50 in 2020 due to an increase in Chinese automobile sales by 14%.
Pricing Factor
Although it is possible to relegate the impact of COVID-19 on these valuable metals to the changes in supply and demand or the duration of lockdowns, COVID-19 has led to a slew of negative consequences, so it isn’t as simple as it seems.
Because the pandemic is one of the primary factors now that will shift the dynamics of precious metals. To understand it in a broader context, we need to look at where the prices will end up after the pandemic.
Up-surge In Sales
The upsurge in sales for platinum is also due to its correlation with gold. The price of gold reached its peak in 2020 as it traded for 2,067/troy ounce. Investors and industrialists who use platinum in China took advantage of its low prices via sales on SGE (Shanghai Gold Exchange), which up-streamed to 455koz in Q1 in 2019.
Apart from that, WPIC product partners in the United States and Japan stated that consumer demand for platinum coins and bars has significantly increased. The percentage change in China for the sales of platinum (all vehicles) from 2018-2019 is 2.8% and of palladium (all vehicles) is 27.8%.
In North America, there’s been a drop of 2.5% in platinum sales but an increase of 1.7% in palladium sales. Whereas in Europe, platinum sales dropped by 5.2% and consumer buying of palladium increased by 9.3%.
Having said that, wouldn’t it be wise to invest in platinum and palladium? They have a high resale value and the prospects of their market growth in the future are huge. They also hold sentimental value as well and would make a perfect gift for a loved one since it will benefit them too as an investment.
What is holding you back? Orion Metal Exchange offers highly competitive pricing and a smooth acquisition process with the assistance of a personal and experienced account representative. For further details, don’t hesitate to get in touch with us on 1-800-599-0088 or email at support@orionmetalexchange.com.
