Ripple effect from VW scandal: Palladium surges as diesel cars lose their shine

Ripple effect from VW scandal: Palladium surges as diesel cars lose their shine

TOKYO — Palladium prices have been rising on the view that more drivers will switch to gasoline-powered autos in the wake of Volkswagen’s diesel emissions scandal.

     The precious metal is nearing the level of platinum. Both substances are used in catalytic converters to cut pollution, but gasoline vehicles rely much more heavily on palladium.

     The benchmark palladium futures contract neared a two-and-a-half-month high of $660 per troy ounce in New York during off-hours trading Friday, up $130 from a low touched in late August. Platinum traded at around $950, down $70. The differential was the narrowest in 13 years, compared with a $400-plus gap at the start of 2015.

     A diesel passenger car typically uses about 2 grams of platinum and 0.5 gram of palladium as catalysts. A gasoline vehicle uses around 2 grams of palladium and virtually no platinum.

     High prices had already led manufacturers to cut platinum use, and the scandal may weaken demand even further.

     Palladium is also riding brisk sales of new cars in the U.S., where demand for gasoline vehicles is strong. August new-car sales there grew more than 3% on the year, according to an American research company.

     And with firming crude oil prices stemming the ruble’s weakening since mid-August, fewer market watchers now expect key producer Russia to boost output.

     Palladium continued to climb Friday on the Tokyo Commodity Exchange. Platinum rebounded somewhat on bargain hunting.

(Nikkei)

Ripple effect from VW scandal: Palladium surges as diesel cars lose their shine