The last year has seen the supply of palladium periodically squeezed and supporting the price as it moves higher. The four major global regions that mine the metal are Montana, Ontario, Norilsk and Transvaal. At the moment, exports from Norilsk, in Russia, are not suffering. However, because of the ongoing issues in Ukraine there is a fear that this might not last. The last year has seen a number of strikes from miners in South Africa as they have battled for better working conditions and better pay. South Africa and Russia account for almost 80% of global supply of palladium.
Car sales have been steadily picking up over the last five years, and the last two years has seen demand outweigh supply. Considering events in Russia and South Africa, it is looking increasingly likely that this could be the third year of imbalance.
The 50-day moving average has proven to be a real area of support after the spot palladium price bounced off it a number of times this year. Supply side issues are unlikely to be resolved imminently, and the strong bullish trend should be maintained. Only a close below the 50-DMA of $790 would cause us to reassess our outlook.