Singapore Bullion Market Association

Website Sponsor

Article List

Article List

Platinum & Palladium Outlook

By Bruce Ikemizu, Head of Commodities Trading, ICBC Standard Bank, Tokyo Branch

Published on June 5, 2019

PLATINUM

Platinum had a clear change of course in the middle of August 2018 after all commodities and emerging currencies were sold in what we call a selling climax. Platinum hit $755, which was the cheapest price since the aftermath of the Lehman shock in October 2008. Back then, car makers rushed to sell their stocks when it hit $2,300 to get liquidity during the Lehman crisis, the historically highest price due to the electricity problem in South Africa. In a sense this drastic move was the car makers’ own doing. They bought it up to $2,300 and sold it down to $750.

Figure 1: Platinum’s price over the past 20 years

Since then, platinum certainly has had its ups and downs. Stricter environmental regulation on diesel engines has affected its use in automobile catalysts, the metal’s biggest demand area. This was compounded by misconduct by European car makers who were found to be rigging emissions tests on their diesel engines in 2015. Europe, the biggest market for diesel cars, was affected in a big way. Demand for small passenger cars using diesel shifted in favour of gasoline or EV vehicles. These moves, coupled with global environmental move away from diesel, had a deep psychological impact on investors. With ample supply coming from South Africa, a stable supply from catalyst and jewelry scrap, as well as the increasingly weak South African rand, investors did not see any good opportunities to invest in platinum.

Furthermore, precious metals investors also had their eyes on gold and palladium. Gold historically has had a large numbers following and enthusiastic believers like central banks. There is always someone who is buying gold. Palladium on the other hand, quite contrary to platinum, saw ever increasing demand from its use in catalysts in gasoline cars, which caused a supply shortage that piqued the interest of investors. As a result, platinum fell by the wayside and the price of gold surpassed it more than 5 years ago, and palladium went premium in 2017.

Will the price of platinum lag gold and palladium forever? I don’t think so. First of all, platinum, priced below $900, is too cheap even in this market. The value of the metal as a catalyst or jewelry should be more valuable than palladium or gold. Its production cost is way higher than $800. Some investors seem happy at at this situation and are putting their funds into platinum ETFs, which have grown significantly since the start of 2019. This investor interest coupled with the steady price of gold should keep the price of platinum in check despite the weak environment for the metal. The worst is over and platinum should stay above $800 and hopefully move closer to $1,000 if gold reaches $1,400.

Figure 2: Prices of platinum, gold and palladium

Figure 3: Platinum ETF balance, Nymex investors position and platinum price

PALLADIUM

The weakness of platinum has spurred the popularity of palladium, which has grown in price because it had 1/5 of value of Platinum. Catalytic converters in gasoline engines do not need a high specification of platinum catalyst so naturally car makers and catalyst manufacturers used less but enough capable and much cheaper palladium. A large proportion of automobile produced globally are gasoline engine cars. The demand for palladium catalysts grew 100% in the past 10 years, from 180 tonnes to 264 tonnes, while output by the two largest producers – Russia and South Africa – has largely remained at the same level, according to Metals Focus.

Figure 4: Price of palladium, 2009–2019

Figure 5: Palladium ETF balance, Nymex investor positions and price

As a result, a supply-demand deficit has persisted for the last 7 years, which is the main reason for the sharp increase in the price of palladium in the last decade – from $200 in 2009 to $1,600 in 2019. Palladium lease rates reached 30% a year at its peak. These fundamentals lured physical investors and Nymex investors alike into buying palladium and that interest likely pushed up the price more than they should. Good long liquidations from investors pushed palladium from $1,600 to $1,300, but its price currently remains volatile.

But the basic supply and demand has not changed at all. Interestingly, the ETF balance has been decreasing while the price of palladium has been growing. This probably means physical palladium was withdrawn from the ETF due to the supply shortage, quite a keen contrast against that of platinum.

We cannot expect palladium supply and demand situation changes in near future. That is either we have sharply more supply or sharply lower demand. Palladium as a by-product of nickel in Russia and platinum in South Africa cannot increase its production. Gasoline cars still dominate automobile production and this will also not change in big way any time soon. EV still has the smallest share of the all the cars produced in the world despite of the media’s wide coverage. Because of the huge volatility so far this year, attitudes toward palladium will remain uneasy but as long as the supply and demand situation does not change, it will remain much higher priced than platinum.

BRUCE IKEMIZU is a precious metals industry veteran. He began his career in 1986 at Sumitomo Corporation Tokyo’s precious metals department, before joining Credit Suisse Tokyo and establishing Credit Suisse Bullion Japan. He then joined Mitsui & Co. to lead its precious metals trading team. In 2006, he set up the Tokyo branch of Standard Bank (now ICBC Standard Bank) and its precious metals trading and sales team. He currently is currently the firm’s Tokyo branch manager.

PREV ARTICLE
NEXT ARTICLE
BACK TO INDEX

SECRETARIAT SBMA-Emily-Oh

Emily Oh

OPERATIONS & ADMIN EXECUTIVE
Emily Oh is the Operations & Admin Executive, a seasoned professional who values teamwork and effective communication. She is skilled at adapting to new challenges and takes a proactive and resourceful approach to every task. Before joining SBMA, Emily had experience coordinating international travel arrangements and spearheading community initiatives. Her role at SBMA will be providing operational and administrative support for projects and other matters to the team.

SECRETARIAT SBMA Clara-Chang

Clara Chang

MARKETING & COMMUNICATIONS EXECUTIVE
Clara Chang joins SBMA as the Marketing & Communications Executive, enriching the team with her extensive experience in content creation, social media management, and digital marketing. Prior to joining SBMA, Clara held the position of Marketing Executive at her previous job. She holds two bachelor’s degrees from the University at Buffalo, one in International Trade and another in Geographical Information Science. Her core duties will include maintaining the SBMA website, managing the quarterly Crucible newsletter, among other responsibilities.

SBMA Committee-Photo-john-levin

Mr John Levin

Global Metals
TD Securities
John Levin is the Head of Metal Sales & Trading – APAC at the Toronto Dominion Bank’s Singapore office. Prior to this role, he devoted seven years to leading precious metal sales for the ANZ banking group in his home country, Australia. Notably, from 2009 to 2011, John played a significant role on the management committee of the London Bullion Market Association while serving as the Head of Precious Metals Sales for HSBC Global Banking and Markets in the UK.

SBMA Secretariat-Fabian-Lew

Fabian Lew

MARKETING & COMMUNICATIONS OFFICER

Fabian was a Business Development and Marketing Associate before joining SBMA. He graduated from Singapore Management University with a Bachelor’s degree in Economics.

He has joined SBMA since February, 2022.

SBMA-margare-secretariat

Margaret Wong

BUSINESS DIRECTOR

Margaret Wong, Business Director at SBMA (Singapore Bullion Market Association), brought valuable experience from her previous role at the World Gold Council (WGC). Her tenure at WGC provided her with extensive exposure to the gold community in Singapore and the broader region. This background has been instrumental in establishing strong working relationships within the industry.

Margaret’s role at SBMA encompasses a diverse range of responsibilities. She oversees office management, business support processes, finance, and administrative functions essential for the smooth operation of the team and management committee. Additionally, Margaret handles membership matters, member communications, and addresses public inquiries related to SBMA.

One of Margaret’s key responsibilities is coordinating with the Event Management Company for SBMA’s prestigious annual event, the Asia Pacific Precious Metals Conference. This flagship conference plays a crucial role in the industry, making her involvement pivotal in its success.

Described as resourceful and self-motivated, Margaret Wong brings a wealth of skills and experience to her role at SBMA, ensuring efficient operations and effective engagement within the precious metals community in Singapore and beyond.

SBMA-Albert-secretariat

Albert Cheng

Chief Executive Officer

Albert Cheng joined the World Gold Council in March 1993 as a Regional Manager, becoming Managing Director, Far East in 2003. He retired at the end of March 2015 and was subsequently named its Advisor. He has also been an International Advisor to the Shanghai Gold Exchange since 2002.

His marketing career began with Dentsu Young & Rubicam, Hong Kong in the early 80’s. He began gold marketing in July 1985 when he joined the Royal Canadian Mint as a Regional Manager for Southeast Asia.

He was appointed honorary CEO of SBMA in November 2015. He is responsible for the success and strategic development of SBMA, represents the interests of the Association, and is responsible for all the legal and regulatory aspects of the work of the Association. He is the primary contact for regulators and government bodies on bullion market development.

Ms Pawan Nawawattanasub

Ms Pawan Nawawattanasub

CEO
YLG Bullion Singapore Pte Ltd

Pawan is the CEO of YLG Bullion Singapore and founder of YLG Bullion International. She has almost 40 years of experience in the jewellery industry and established YLG in Thailand in 2003. In 2012, she brought YLG to Singapore. She sits on the Board of Directors of the Thailand Gold Traders Association, the Thailand Futures Exchange’s Arbitration Committee, and the Rotary Bangkok committee. She holds a master’s degree in Political Science.

SBMA-Shaokai-Fan

Mr Shaokai Fan

Head of Asia-Pacific (ex China) and Global Head of Central Banks
World Gold Council
Shaokai Fan is the Global Head of Central Banks at the World Gold Council, responsible for advising governments on gold matters, and enhancing the gold market through engagement, dialogue, and thought leadership. He works directly with central banks and sovereign wealth funds on investment considerations. Prior to this position, Shaokai held multiple roles at Standard Chartered Bank, including Director for Asia Strategic Initiatives and Associate-Director for Public Sector coverage. Shaokai holds a Masters of Public Administration from Columbia University and the London School of Economics, and an undergraduate degree in finance and economics from New York University.

SBMA-Committee-Alan-Liew

Mr Alan Liew

Head of Bullion & Commodities Trading
United Overseas Bank Limited
Alan is Head of Bullion and Commodities Trading for Group Trading in Global Markets, United Overseas Bank (UOB). Alan joined UOB and started the bank’s commodities trading business in 2014, previously he spent eight years in Standard Chartered Bank (SCB) trading both precious and base metals. During his tenure at SCB, he obtained the SGE gold trader licence and was part of the pioneering team for the SGE business and the FX quantitative trading team. Prior to trading, he worked for Monetary Authority of Singapore in the Financial Risk Management Division. He holds a BSc (Hon) in Computer Science at National University of Singapore and a MSc in Financial Engineering at Nanyang Technological University.

SBMA-Committee-Nikos

Mr Nikos Kavalis

Managing Director
Metals Focus Singapore Pte Ltd
Nikos Kavalis is a founding partner of Metals Focus. He has over 20 years of experience in precious metals, having previously worked for the Royal Bank of Scotland and GFMS. Since September 2019, Nikos has been based in Singapore, where he also runs the local subsidiary of Metals Focus.

SBMA-Committee-khun nuttapong

Mr Nuttapong Hirunyasiri

CEO
MTS Gold Global Trading Pte Ltd
Nuttapong Hirunyasiri is the CEO of MTS Gold Group, one of Thailand’s top 10 companies and top 3 bullion companies. He started MTS Gold Group’s first overseas office in Singapore and has been expanding the group business internationally. He focuses on product development and innovation for gold investment, with the aim of being a leader in providing the full suite of gold investment services in the ASEAN region.

SBMA Committee-Photo-Raman-Walia

Mr Raman Walia

Executive Director, Head of Commodities Sales – APAC
JP Morgan Chase Bank N.A.

Raman is Executive Director and Head of Commodities Sales, APAC, for J.P. Morgan. He joined JPMorgan in 2008 in New York, moved to Singapore in 2011, and helped expand the precious metals business in the region. Raman has an MBA from Cornell University, and likes to travel in his spare time.

SBMA Committee-Photo-Andrew-Clarke

Mr Andrew Clarke

Head of Brink’s Global Services
Brink’s Global Services Pte Ltd

Andrew Clarke is the Head of BGS (Brink’s Global Services) for Singapore, Indonesia, Malaysia and Brunei. He has held various leadership positions throughout his career in secure logistics and risk management with Brink’s, which started in Hong Kong in 2010. Andrew relocated to Singapore in 2018 to expand the precious metals line of business along with Brink’s portfolio of services and industries.

SBMA Committee-Photo-Kazuya-Naoki

Mr Kazuya Naoki

Head of Metals, Asia
ICBC Standard Bank Plc, Singapore Branch

Kazuya (Kaz) Naoki is the Head of Metals, Asia of ICBC Standard Bank in Singapore and is responsible for the precious & base metals sales and trading in the region. He joined Standard Bank Plc Tokyo Branch in 2008 and was relocated to its Singapore Branch in 2013 whose controlling stake was acquired by the Industrial and Commercial Bank of China in 2015. Prior to joining Standard Bank, Kaz spent 11 years focusing on commodity trading and risk management with Mitsui & Co in Tokyo, Sydney and London. Kaz has been serving on the SBMA Management Committee since 2016.

SBMA Committee-Photo-Vinh-Nguyen

Mr Vinh Nguyen

Head of Precious Metals, Asia
StoneX APAC Pte Ltd

Vinh Nguyen joined StoneX Group in Singapore at the beginning of 2008 and responsible for its APAC precious metals activities since 2019 until now.

SBMA Committee-KL-Yap

Mr KL Yap

General Manager, Singapore Refining Business Unit
Metalor Technologies (Singapore) Pte Ltd
KL YAP is the General Manager of Metalor Technologies (Singapore) Pte Ltd’s Singapore Refining Business Unit. He joined Metalor in 2013, initially in Refining Sales. In 2014, he became Refining Business Unit Manager, leading the development of a new precious metal refinery. KL was Vice Chairman of SBMA from 2017 to 2021, now serving as Chairman. With a degree in business commerce, finance, and marketing, he brings prior experience from refinery and heavy industries.