Explained: Why palladium is more precious than gold or platinum; its uses

Around 90 percent of all palladium currently refined and extracted is used in the exhaust system of cars. Palladium forms a crucial part of the catalytic converters that are affixed to all modern vehicles. Catalytic converters are responsible for transforming over 90 percent of all harmful gases emitted by engines into less harmful substances. Catalytic converters change hydrocarbons, carbon monoxide, and nitrogen dioxide into nitrogen, carbon dioxide and water vapours. Without catalytic converters, vehicle emissions, which are already a leading cause of global emissions, would be even more polluting and dangerous.

Apart from exhaust systems, palladium is also an essential part of hydrogen fuel cells, an emerging technology that can completely replace all fossil fuel-based vehicles and even usurp electric vehicles in terms of environmental sustainability.

Palladium is used in trace amounts in other sectors as well. These include electronics, dentistry, medicine, hydrogen purification, chemical applications, groundwater treatment, and jewellery.

While the price of spot gold is $1,758.51 per ounce (Rs 1,30,585.11 for 28.3 g), palladium’s price is much higher. The current spot price of palladium is $2,556.00 per ounce (Rs 1,89,805.88 per 28.3 g).

The cost of the silvery-white metal is also higher than its more famous group member, platinum. While platinum is used for fine jewellery as well, its price is only $1,014.00 per ounce (Rs 75,298.58 for 28.3 g), nearly one-third that of palladium.

Even with that kind of a price tag, palladium is far from being the most expensive element or even metal in the market. Rhodium, another metal from the PGM group, is rarer and commands a price of $17,050.00 per ounce (Rs 12,65,885.78 per 28.3g). Artificially created elements like calfornium can be more expensive than rhodium.

The price of palladium has jumped significantly over the past 2-3 years, having seen a growth of over 50 percent in 2019. Palladium’s supply has been below the global demand for over nine years now and the situation is only expected to settle down by 2023.

The slow supply is triggered by its rarity. The metal is only mined in a few areas, with the Bushveld Igneous Complex, in Transvaal Basin, South Africa; the Stillwater Complex in Montana, United States; the Sudbury Basin and Thunder Bay in Ontario, Canada; and the Norilsk Complex in Russia being the major extraction centres.

Tightening regulations on vehicle emission standards have also created an increase in the demand for the metal. The increase in the popularity of petrol vehicles, that use palladium in their catalytic converters, over diesel vehicles, that use platinum, also contributed to its increasing demand.

The price of palladium is expected to increase over the next couple of years before finally dropping off the bull rally. Amid a greater push to switch to EVs, emerging new technologies that use the cheaper platinum in catalytic converters and an increase in supply over the next few years will contribute to the future decline in prices.

Even with large-scale adoption of hydrogen fuel cell technology, palladium will still be in high demand.