22 April 1998
New York—The price of palladium soared on Wednesday on speculation that Russia, the world's biggest producer, will not export any of the metal, worsening an already bad supply problem.
Palladium, which is used mainly in vehicle catalytic converters to help cut exhaust pollution and to make electronic components and in dentistry, jumped $43 to $378 per ounce in the bullion market, nearing a 100% leap since early January. Palladium futures closed up $12 an ounce on the New York Mercantile Exchange, with the June delivery at $308.55 per ounce.
Palladium prices in the past week have climbed higher than gold prices for the first time since before the collapse of the Bretton Woods agreement in 1971, when gold rose from $35 an ounce, the rate it had been fixed at since 1944. Gold hovered at $313.50 per ounce in New York trading on Wednesday.
Russia supplies 60% of the world's palladium and 20% of its platinum, but Russian exports have been suspended since December, leading to a shortage of both.
While Russia's acting Prime Minister Sergei Kiriyenko is reported to have signed an agreement to export the silvery metals this year, the absence of a Russian government has meant the country's metal export agency, Almaz, has not been able to proceed with negotiations on new supply contracts, analysts said.
"It's the same old story - the problem about the choice of the new Russian prime minister and whether or not there is a chance the parliament will approve him," one Swiss dealer said. The Russian Duma, the nation's parliament, rejected Kiriyenko in its second vote on his candidacy last week. If he fails for a third time at Friday's scheduled vote, the assembly itself will face dissolution and elections.
Similar bureaucratic hurdles led to a six-month suspension of Russian exports early in 1997, forcing users such as car manufacturers, electronics companies and dentists to pay sharply higher prices.