Palladium, used mostly in catalytic converters in petrol engines, is 2017’s best-performing commodity with a 30% gain. Mine production has fallen behind demand every year since 2012, and stockpiles appear to be running low.
But the rally could run out of puff soon, reckons Stephanie Yang in Barron’s. Demand is likely to slip now that car sales are softening in both China and the US; year-on-year light vehicle sales are down 2% in 2017 so far. Moreover, speculators have piled into the small market of late, which increases the scope for a sharp reversal once bullishness fades.