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Supply concerns lift palladium to a 13-year high

First Published      Last Updated Aug 29 2014 05:55 pm

New York • Palladium futures jumped to the highest since 2001 as supply concerns mounted amid prospects for further sanctions against Russia, the world's biggest producer.

The U.S. and Europe accuse Russia of escalating the five-month conflict in Ukraine by sending troops over the border to support rebels. An ounce of palladium, which is used mainly in pollution-control devices in cars, bought as much as 0.6383 ounce of platinum in London, the most since August 2002, data compiled by Bloomberg show.

Palladium demand this year will exceed mine output by the most ever, according to London-based Johnson Matthey Plc, which makes a third of the world's catalytic converters. A five-month labor strike crimped output in South Africa, the second-biggest source of the metal, helping boost prices 27 percent this year.

"There is a lot of concern about palladium as imposition of more sanctions against Russia may affect supplies, which is already in a precarious state because of the strike," Mike Dragosits, a senior commodity strategist at TD Securities in Toronto, said in a telephone interview. "Palladium will continue to remain supported."

Palladium futures for December delivery rose 1.3 percent to settle at $909.55 an ounce at 1:19 p.m. on the New York Mercantile Exchange, after touching $910.50, the highest for a most-active contract since February 2001.

Prices advanced for the seventh straight month, the longest run of advances since January 2011. Holdings in exchange-traded funds backed by palladium rose to an all-time high of 95.93 metric tons this month.

Platinum futures for October delivery decreased less than 0.1 percent to $1,424.70 an ounce, dropping for a second straight month. Prices have climbed 3.7 percent this year.

South Africa is the biggest producer of platinum.

On the Comex, gold futures for December delivery fell 0.2 percent to $1,287.40 an ounce, sliding for a second time in three days. Prices rose 0.4 percent this month as violence in Ukraine boosted haven demand.

Silver futures for December delivery lost 0.6 percent to $19.492 an ounce on the Comex. The metal dropped 4.5 percent this month.