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. Last Updated: 07/27/2016

Ministry-Bank Battle of Wills Sees Price of Palladium Yo-Yo




LONDON -- The price of palladium has been gyrating wildly in recent weeks, a spate of volatility that may have been sparked by a power struggle between Russia's Central Bank and Finance Ministry over exports, analysts said.


The price of palladium, used mainly in automobile catalysts to clean exhaust emissions, fell around 25 percent to $280.00 an ounce in late April from an 11-month high of around $381.00.


But prices rebounded last week, and on Monday spot palladium was at $327.00.


Analysts said prices were likely to remain volatile so long as supply from the world's biggest producer, Russia, remained uncertain.


"The vicissitudes of Russian palladium supply have played havoc with the market over the past three years and the uncertainty is not over yet," said T Hoare & Co. analyst Rhona O'Connell in a recent report.


Analyst Ross Norman of Precious Metals Research said, "It seems that the problem is a fallout in the battle between the Central Bank of Russia and the Ministry of Finance."


Russia supplies around 60 percent of the world's annual palladium needs, with over 40 percent coming from giant Siberian miner Norilsk Nickel.


O'Connell said a rush by Norilsk to sell palladium ahead of a new 5-percent commodities export tariff imposed by the government also contributed to the recent price weakness.


A further 12 tons of metal that showed up in Switzerland last month was said to have come from Central Bank stocks.


Norman said the Russian Central Bank had been receiving metal from Gokhran, the state precious metals and gems reserve.


"The Ministry of Finance is not happy about this. It would seem that this new tax, which has been applied by the Finance Ministry, was a shot back at the Central Bank. The tax was raised without consultation with the Central Bank by the ministry of finance," Norman said.