The political backlash against Russia by the West surrounding the separation of Crimea from Ukraine leaves palladium exposed, according to an upcoming report from Viktor Nossek, Head of Research at Boost ETP the independent provider of short and leveraged ETFs….
“As the largest exporter of palladium, Russia may face further sanctions, potentially hampering the trade of palladium,” explained Mr Nossek. “Worries that this reinforces supply shortages of palladium bolster bullish positioning in the metal. In contrast, copper’s weakness is underpinned by China disappointing March PMI numbers for manufacturing, pointing towards deepening output contraction and weak industrial profits.”
· Supply shortages of palladium have resulted from depleted Russian state stock levels and falling Russian exports, which are reinforced by sanctions against Russia surrounding events in Crimea.
· Destocking of copper has only just started in Shanghai warehouses, with inventory levels hovering close to peak levels attained in 2012, 2013 and so far this year. Deeper contractions in China producing output for March may add fuel to copper weakening.
· Speculators have positioned along the contrasting supply conditions between copper and palladium. The continuing bullish positioning in palladium vs. the recent increase in bearish positioning in copper is expected to drive the performance wedge between the metals wider.