Seeking Alpha: Of Wars & Strategic Metals

An excerpt from a new article by Mark Anthony on Seeking Alpha. Anthony is a big proponent of Palladium and Stillwater Mining Co. Read the full article here.

OF WARS AND STRATEGIC METALS
by Mark Anthony

...Platinum is way better than gold, while palladium is better than platinum due to current price disparity. Unfortunately, physical palladium coins and bars are now extremely hard to find. If you like the PGM metals, consider buying the stocks of Stillwater Mining (SWC) and North American Palladium (PAL). They are the ONLY primary PGM metals mining companies outside South Africa and Russia. Russia, being the dominant palladium producer, can cut back export and boost the palladium price at any time, in their own interests. South Africa continues to struggle with a national electricity crisis which greatly impacts the output of its PGM mining industry...

Palladium Demand Up Despite Industry Woes

iAfrica reports Anglo Platinum's shaky outlook on the Platinum Group Metals (PGMs) market, but continued growth in demand for Palladium for jewelry applications.

Seeking Alpha: Best Safe-Haven Investments

Mark Anthony over at Seeking Alpha wrote another (very long) article on his favorite commodities invetments. He's a long-time champion of Palladium and Stillwater Mining Company, and while this one turns into a tome, it's worth reading his analysis of Stillwater.

Read the full-text here

MJSA: The Year in Palladium

THE YEAR IN PALLADIUM
(Part of a longer a article, read it here)

With a 3.5 percent increase in demand to 6.84 million oz. and a supply increase of 8 percent to 8.59 million oz., the palladium market was in surplus by 1.75 million oz. in 2007, according to Johnson Matthey's Platinum 2008. The following data are from the report:

Palladium supplies rose by 8 percent to 8.59 million oz. in 2007. In South Africa, increased sales from refined stocks augmented mine production to bring supplies to 2.77 million oz., just 5,000 oz. below 2006 levels. Russia's primary production declined slightly to around 3.05 million oz. Johnson Matthey believes 1.29 million oz. of Russian State stock shipped in December 2006 were not sold until 2007 and therefore includes these in its estimates for 2007 supplies. Palladium price climbed 11 percent in 2007, ending the year at $365 per oz. The price increase was driven by movements in the dollar and gold and platinum prices, rather than by market fundamentals. Investor interest remained key to palladium's strength. Overall palladium demand grew by 3.5 percent to 6.84 million oz. in 2007, but global jewelry demand for the metal, excluding purchases of jewelry scrap, fell 25.6 percent, from 995,000 oz. in 2006 to a net figure of 740,000 oz. in 2007. Demand from the Chinese market was 500,000 oz., down from 760,000 oz. in 2006, accounting for much of the worldwide decline in jewelry demand.

In China, the effects of the rapid early introduction of palladium jewelry were still evident in the market. The supply chain may have been overstocked in some places, and large quantities of unsold Pd95O pieces were returned for refining and re-manufactured into higher purity Pd990 in 2007, depressing demand for new metal. The relatively small markets of Eurohttp://www.blogger.com/img/gl.link.gifpe and North America saw some growth, though: Demand there increased to a combined total of 95,000 oz. The North American market for palladium jewelry remains in its early stages, though manufacturers and retailers are working to develop it. The high price differential between palladium and platinum and gold has encouraged manufacturers to start working with the metal. On the consumer side, substantial price increases for diamonds are pressuring bridal ring budgets, and some couples have moved to less expensive materials, including palladium, to save money on men's rings. These trends helped drive palladium demand higher in North America, to 50,000 oz. in 2007.

A sluggish economy and competition for disposable income pressured jewelry sales in Japan, forcing palladium demand down by 7.7 percent in 2007. Almost no palladium-only jewelry is sold in Japan, but jewelry manufacturers there bought 120,000 oz. of palladium for use as an alloying agent in white gold and platinum alloys.


2008 FORECAST

Palladium supplies from mining are likely to fall in 2008 compared to 2007. Although Russian production isn't expected to change much, South African metal sales will be dented by the countrywide power supply problems experienced in the first quarter and by a range of other challenges racing the mining industry. Johnson Matthey expects overall palladium demand to grow in 2008. The outlook for global palladium jewelry demand suggests some growth following strong manufacturer purchases in the first quarter of 2008. The March 2008 announcement by the major PGM producers of a concerted marketing campaign for palladium jewelry may drive consumer purchasing and demand higher. The supply and demand forecaset for 2008 suggests a tightening of the market and the potential for price increases. If the platinum price performs strongly in the next six months, palladium is likely to benefit and could trade as high as $575 within the same period. However, investor behavior remains absolutely key. With many millions of ounces of palladium in investor hands, any widespread sell-off, whether driven by poor stock market performance or a U.S. recession, would force the price down. Johnson Matthey expects a floor price no lower than $400 in the coming six months.

Seeking Alpha: Good Ole Day for Pallladium?

Interesting article today in Seeking Alpha (links to original). Brad Zigler looks at where Palladium was and how supply may affect its price by next summer. The article also mentions a positive development at Stillwater Mining Co., the main mine behind Palladium Alliance International: Labor negotiations have been settled.

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By Brad Zigler

In times of market stress, investors often catch themselves wistfully remembering the "good ole days." That is, between bouts of frantic selling.

I found myself looking backward, too, when a report came over the transom about a new labor contract being forged at Stillwater Mining Co.'s (NYSE: SWC) East Boulder operation.

We'd looked at Stillwater back in December (see "Platinum's Poorer Relation: Palladium"), and again in February (see "Following The Other White Metal") when platinum group metals were on a tear.

Palladium, it turns out, peaked on February 28 at $593.70 an ounce, basis the NYMEX September contract. The September delivery settled at $452 Thursday.

Stillwater's stock took a similar roller coaster ride. Topping out over $22 a share in early March, Stillwater fell below $10 when labor talks stalled.

There'd been no strike at the company's Montana mine, though negotiations between Stillwater and the USW International Union, which represents mine workers, went to the wire. In fact, talks went past the wire. The expiring labor agreement ran out at the end of June, but the two sides agreed to extend talks another couple of weeks.














Stillwater's stock wobbled a lot as talks moved into the terminal phase, first swooning, then finding buyers at ten bucks. Stillwater shares ended Thursday's session at $10.61, after a two-day rally that boosted the stock 8%.

Fundamentals for palladium, says analyst Shawn Hackett of Hackett Financial Advisors, are "very bullish." Recession fears, he admits, have kept the metal's price in check, trumping "the positive implications for a massive shift in substitution demand for catalytic converters and jewelry," says Hackett.

Declines in Russian production and the drawdown in stockpiles should also shape up as bullish factors. Hackett's looking at a target over $800 an ounce by next summer if Russian supplies hold out and stretch to $1,000 an ounce if stocks are completely depleted.

Gee. That'll make these the good ole days.

Johnson Matthey Platinum Metals Review (July 2008)

A bit nerdy, but it is Monday. A new issue of Johnson Matthey's Platinum Metals Review is up on the web. JM is the world's largest assayer & refiner; they're the guys who make those beautiful Palladium alloy blocks that jewelers turn into Palladium rings, watches, necklaces, cuffs and more.

Some of the topics are the company's new sustainability initiatives, new Palladium-based catalysts, and other fun stuff. Full text available soon, so for now you'll have to do with a summary.

Palladium: One Hot Commodity

A little business, a little pleasure is what you get this morning. On the business end, demand for Palladium and Stillwater Mining Company (the Montana mine that supports Palladium Alliance International) are discussed in a Seeking Alpha series called "The Brightest Stars in the Commodities Boom" ... Mark Anthony is one of those writers heavily invested in the companies under discussion, so he's very enthusiastic, but I think he's usually on point.

Dozens of newspapers this week carried an AP article on catalytic convertor theft. The traces of Palladium and Platinum they contain are valuable at the scrap yard. More interesting, however, are the measures some buyers are taking to insulate themselves from trouble.

And now for the pleasure... the beautiful Ulysse Nardin Macho Palladium 950, made completely of pure Palladium. On the wrist it feels formidable, and its shine is outrageous - just a stunning watch. Worth every penny of its $30,000 retail price.

Platinum, Palladium Set to Skyrocket

Good article this morning on the demand for Palladium and global supply, via Seeking Alpha. A lot of the investment bankers writing for SA have monetary interests in their topics, but Mr. Roseman has no disclosures here so we can take it as a fairly untainted outlook on the metals market.

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By Eric Roseman

No other precious metal has a tighter supply than platinum.

Though platinum prices have remained high over the last few years, supplies are getting thinner by the day as South African production draws to a standstill. Lately, these tight supplies have helped platinum prices shoot up north of US$2,000.

In fact, platinum has climbed so high that its sister metal, palladium is becoming the new exciting speculation. Right now, palladium is sitting at 56% off its all-time high in 2001 of US$1,100 an ounce. The platinum-to-palladium differential hit its widest level in history in late May as platinum prices rocketed to new highs.

So the question is: Has the price of platinum climbed so high that industries will start switching to palladium?

......Read the full article

WSJ / A New Craze: Platinum ETFs

This isn't about Palladium jewelry - in fact it's mostly about Platinum! But part of understanding the jewelry market is looking into the economics behind the metals. Today's Wall Street Journal has a good article on Platinum Group Metals and their rising popularity in Exchange Traded Funds (ETFs).

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By CAROLYN CUI
July 8, 2008; Page C14

Gold and silver bugs, move over.

Investors are flocking to a new class of precious metals: the kind that actually do things, rather than end up in vaults or on fingers.

Platinum prices have soared 30% this year and its cheaper cousin, palladium, has risen 19%, largely on demand for cleaner cars. A flood of new investment vehicles -- including exchange-traded funds -- that allow investors to bet on these metals' trajectory also are fueling the market.
[Metals]

The two metals are called "precious" because of their scarcity. Platinum jewelry has long been a higher-end alternative to gold. But unlike gold, platinum isn't viewed as a prime refuge for investors in times of uncertainty.

.... Read the full article