palladium Nears Record After Hedge Funds Piled In
By Marvin G Perez
October 22, 2018, 6:15 AM PDT
- Citigroup sees ‘tightest’ palladium market in decades
- One-week lease rate climbs to 7.2%, double 10-year yields
palladium climbed near a record as the U.S. plans to pull out of the nuclear weapons pact with Russia, fueling tensions with one of the largest producers at a time when consumers are already scrambling for supplies.
Production will trail consumption by 481,000 ounces this year and deficits will persist through 2020, leading to the “tightest” market in two decades, Citigroup Inc. analysts including Max Layton said in a note in late September. The tightness in supply has created a lucrative business of lending the metal, spurring withdrawals from exchange-traded funds.
Running Short
Hedge funds have been building their bullish bets on the metal. In the week ended Oct. 16, money managers boosted their net-long position for an eighth straight week, the longest streak since January 2013. Wagers on the metal’s price advance outnumbered bearish bets by 10,122 futures and options, the most since the mid-June, Commodity Futures Trading Commission data released Oct. 19 showed.
The metal for immediate delivery climbed as much as 2.2 percent to $1,106.25 an ounce, near a record of $1,139.68 reached in mid-January. palladium traded at $1,104.28 at 8:45 a.m. in New York.
Moscow-based MMC Norilsk Nickel PJSC produced 2.78 million ounces in 2017, the most of all the companies tracked by Bloomberg Intelligence.
Trump is “pulling out of the agreement with Russia,” Phil Streible, a senior market strategist at RJO Futures, said by telephone. “That could tighten up available supply for palladium.”
While the lease rates are down from a peak in August, borrowers still pay holders of palladium 7.2 percent to use the metal for a week as of Oct. 22, data compiled by Bloomberg show. That’s double the 3.2 percent yield on 10-year Treasuries. Holdings in exchange-traded funds backed by palladium shrank to the lowest since March 2009.
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Platinum Group Metals is a platinum development stage company based in Canada. Platinum Group Metals holds various exploration projects in Philippines. Its main asset in development is WESTERN BUSHVELD JV in South Africa and its main exploration properties are AGNEW LAKE and LAC DES ILES in Canada, WAR SPRINGS and TWEESPALK in South Africa and ACT (ADLAY CAGDIANAO TANDAWA NICKEL) in Philippines. Platinum Group Metals is listed in Canada and in United States of America. Its market capitalisation is CA$ 235.5 millions as of today (US$ 171.9 millions, € 160.5 millions). Its stock quote reached its highest recent level on November 30, 2012 at CA$ 9.90, and its lowest recent point on June 15, 2018 at CA$ 0.12. Platinum Group Metals has 133 070 008 shares outstanding. |