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(Reuters) - Russia’s Nornickel expects the global palladium market to swing to a surplus of 300,000 troy ounces in 2024 from a deficit of 200,000 ounces in 2023 due to recycling outpacing demand recovery, the miner said on Wednesday.
Nornickel, which has not been directly targeted by Western sanctions since Russia’s invasion of Ukraine, accounts for 40% of the global primary production of palladium, used in vehicle exhausts to neutralise harmful engine emissions.
“The automotive sector, which contributes to over 80% of palladium use, is slowly recovering after COVID and supply chain-related shocks of 2020-2021. That is anticipated to drive metal demand growth to 1% this year,” Nornickel said in its updated market review.
The excess of palladium consumption over production in 2022 and so far in 2023 has been offset by the sales of previously accumulated inventories by carmakers and manufacturers of catalytic systems, Nornickel said, adding that the mass destocking was likely to end in the second half of 2023.
The miner, which saw a 16% drop in 2022 net profit as it grappled with supply chain disruption after Western sanctions were imposed on Moscow, previously expected the global palladium market deficit at 300,000 ounces in 2023.
Nornickel, which also accounts for 20% of high-grade nickel production, added that the global nickel market surplus was expected to exceed 180,000 tonnes in 2024 after 200,000 tonnes in 2023 - broadly in line with the International Nickel Study Group’s expectations for this year.
Reporting by Gleb Stolyarov, Polina Devitt and Alexander Marrow; writing by Polina Devitt; Editing by Gareth Jones
