(metallplace.ru) - Last week, prices for palladium soared by 20 percent. Against this backdrop, shares of Norilsk Nickel, one of the largest producers of platinum group metals, significantly outperformed the market. In addition to the geopolitical factor, the Federal Reserve System’s meeting, that pushed up the prices for precious metals, Nornickel announced several research and industrial projects in battery production and recycling last week and at the beginning of this one.
Monchegorsk is considered as a possible location for a factory for the production of cathode materials for batteries, but the final decision on its construction has not yet been made, said Vitaly Busko, Nornickel’s Vice President for innovation, speaking to journalists in St. Petersburg last week. He noted that the company was studying various options for implementing the project, and the construction of a large-scale factory would be launched upon confirmation of its economic expediency.
Busko also emphasized the strategic importance of battery materials production for the company. The Nornickel’s Battery Technology Center works on synthesizing cathode active materials for lithium-ion batteries, and laboratory samples have already been obtained. According to the Vice President, the center opened in late 2022 is capable of synthesizing up to 10 kg of material in one cycle.
To date, investments in the Battery Technology Center’s equipment are about $30 mn. Future investments in the project would depend on the decision to build a factory, he said. Vitaly Busko added that two stages had already been completed as part of the Nornickel project, and a decision would soon be made on building a pilot plant for the production of up to 10 tons of cathode materials per year. “We have worked our way from obtaining tens of grams to several kilograms, the next step is to set up a pilot plant, and the completion of the project involves the construction of a full-fledged factory,” he noted. According to the top manager of the metallurgical giant, the construction may take 2 to 2.5 years, and various locations for the pilot plant are currently under consideration. He also said that Nornickel estimated Russian market’s needs for cathode materials at 10 thousand tons per year, while global demand was estimated at millions of tons.
Russian President Vladimir Putin’s initiative to gradually decline the exports of some metals, such as titanium, uranium and nickel from Russia enhanced the dynamics of the situation in the metals market in general and palladium in particular. Palladium has not yet been included in the list, however, given the tense geopolitical situation, one should not rule out expanding the list of metals that will fall under restrictions.
“Despite the recovery of global vehicle production last year, palladium prices continued to decline in 2023 due to weakening demand. On the whole, palladium prices dropped by over 34 percent in 2023, from $1,659 per ounce in early January down to $1,109 per ounce in late December. This is partly due to consumers who continued using platinum, especially after palladium prices hit a record high of $3,440 in March 2022. In addition, sales of battery electric vehicles and hybrid ones continued to grow, leading to a reduction in the market share of gasoline-fueled vehicles that are the main source of demand for palladium,” said Dmitry Orekhov, Managing Director of the National Credit Ratings (NCR) agency.
“In 2024, the palladium prices have not yet shown any significant signs of recovery. During the current year, the price for the metal is around $1,000/oz. The factors influencing the prices for the metal this year are the persistent supply deficit for the third year in a row, the slowdown in sales of new vehicles, and the postponed implementation of the new Euro 7 emission rules in Europe,” he continues.
“It is expected that in the medium term, the increasing use of electric vehicles will gradually reduce the share of fossil fuel electric vehicles, but the reluctance of consumers - who still prefer hybrid cars - to completely switch to electric vehicles may slow down the decline in the production of internal combustion engines,” Orekhov concluded.
“It cannot be said that there is a shortage in the global palladium market. The major importers of Russia’s palladium have remained the same, they are South Korea, France, Great Britain, and Germany. Palladium exports to the markets of Southeast Asia, for example, to China have been added,” said Oleg Abelev, PhD in Economics, Head of the Analytical Department of the Ricom-Trust investment company.
“Russia, represented by Nornickel, accounts for about 40 percent of global palladium production. Since 80 percent of palladium consumption is in the automotive industry, the main consumers of the metal in the world are China, Europe and North America. Russia lags far behind in palladium consumption. In the near future and in the medium term, Nornickel is expected to keep the lead in Russia in palladium production,” said Ilya Makarov, Director of the ACRA Corporate Ratings Group.
“Russia’s palladium was present in the world market to a significant extent and continues to be in the market. Only the logistic chains and end sellers of Russia’s metal have changed,” he summed up.
