September 27, 2017 / 2:18 PM / a year ago

Platinum, palladium hit price parity for first time in 16 years

LONDON (Reuters) - Palladium hit price parity with its better-known sister metal platinum on Wednesday for the first time since 2001, as demand expectations for the two assets diverged.

FILE PHOTO: A palladium bar is displayed at the Prioksky Non-Ferrous Metals Plant in Kasimov, Russia February 14, 2017. REUTERS/Sergei Karpukhin

Both are primarily consumed by automakers for catalytic converter manufacturing, but platinum is more heavily used in the diesel vehicles that have fallen out of favor since 2015’s Volkswagen emissions-rigging scandal.

FILE PHOTO: Ingots of 99.98 percent pure platinum are seen at the Krastsvetmet non-ferrous metals plant, one of the world's largest producers in the precious metals industry, in the Siberian city of Krasnoyarsk, Russia, March 9, 2017. REUTERS/Ilya Naymushin

Palladium, in contrast, has benefited from a switch to petrol engines and expectations for growth in hybrid electric vehicles, which tend to be gasoline-powered.

“All the news we’ve been hearing about the electrification of vehicles is good for sentiment towards palladium, as it implies more gasoline hybrid vehicles,” Mitsubishi analyst Jonathan Butler said.

“Palladium has the wind in its sails from investor interest and there has been a good amount of speculative activity holding it up and keeping market conditions tight,” he added. “Physical demand in Greater China has been very strong this year.”

Spot palladium was at $919.50 an ounce at 1342 GMT, up 0.6 percent, while platinum was down 0.3 percent at $917.49 an ounce. Palladium prices have risen 35 percent this year, against a 2 percent increase in platinum.

Reporting by Jan Harvey; Editing by Dale Hudson

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