Palladium to outperform platinum if AMCU strike

There is a significant risk that the ongoing wage negotiations between platinum group metals (PGM) producers in South Africa and the Association of Mineworkers and Construction Union (AMCU) will lead to prolonged strikes at PGM mines. In this Metals Watch, we analyse the potential impact of such strikes on the prices of the two main PGM metals, platinum and palladium.
Franziska Palmas Markets Economist
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Industrial Metals Update

Slower growth in China to drag on prices in 2022

While high power prices and low stocks will support prices in the near term, we think that prices will pull back in the second half of 2022 as Chinese economic activity slows further and supply improves. Drop-In: Neil Shearing will host an online panel of our senior economists to answer your questions and update on macro and markets this Thursday, 13th January (11:00 ET/16:00 GMT). Register for the latest on everything from Omicron to the Fed to our key calls for 2022. Registration here.

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Metals Data Response

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Global steel production contracted in y/y terms in November, mainly owing to depressed output in China. Although China’s power rationing came to an end last month, there are no signs of an upturn in steel supply. Given our expectation that construction-related steel demand will remain subdued, a sustained rebound in China’s steel production appears unlikely in the coming months.

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Industrial Metals Update

Drawdown in stocks to reverse in 2022

Exchange stocks of base metals have fallen this year, as supply was interrupted by power rationing in China as well as the ongoing effects of COVID-19. However, now that power restrictions have been lifted, and with Chinese construction activity continuing to weaken, we expect stocks to start to build which should weigh on prices in the coming year.

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Capital Daily

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Despite the limited market reaction to today’s higher-than expected US CPI print, we still think that the yield of US 10-year Treasuries will rise this year as high inflation proves persistent. We expect yields to rise in the euro-zone as well, but by less than in the US. Today’s ECB decision supports this view.

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Assessing the outlook for EM monetary policy & LC bonds

While we expect the yields of 10-year emerging market (EM) local-currency (LC) government bonds to increase as the US 10-year Treasury yield resumes its rise, we think increases in yields will generally be smaller than in the US. This reflects our view that most EM central banks will tighten policy more slowly than investors currently anticipate.

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