| To: Todd King who wrote (1116) | 2/23/2000 10:48:00 AM | | From: R. Bond | of 1336 | | |
FYI:
The stock is tanking.
Bond
biz.yahoo.com 
Wednesday February 23, 5:58 am Eastern Time
FOCUS-Palladium climbs into Europe
but falters early
By Sharman Esarey
LONDON, Feb 23 (Reuters) - Palladium surged into European
trade on Wednesday, as scarce supply of the metal needed by the
booming automaking trade to clean exhaust gases prompted
exchange measures to calm chaotic overnight trade.
Palladium, which has doubled in price in 2-1/2 months and hit a series of all-time peaks this month,
opened the day at $800 a troy ounce with sellers only willing to offer metal at $850, before fixing at
$798 and sliding back to $760.
Given upredictable supplies from main producer Russia, dealers and analysts expect the metal to
swiftly hit $1,000 an ounce, with only a resumption of Russian supplies seen halting the metal's
dramatic run.
``This market is out of control and we could easily see it gain another $200/300,' one European
dealer said.
But matters may get more serious than that. With the widening spread, market makers may begin to
question metal availability and hence their ability to quote both bids and offers for the market.
``The next level would be a question of the availability of metal (rather) than prices,' a trader said.
Trading ground to a virtual halt early on in Europe, given the gaping spread and news the Tokyo
Commodity Exchange (TOCOM) would allow palladium futures trading only at Wednesday's closing
prices in an apparent bid to force traders to liquidate huge long positions and ease market tightness.
``It was almost impossible to trade in Japan,' another European trader said.
Earlier this week, the exchange twice cut daily palladium trading limits in an effort to clamp down on
scared shorts whose terrified pursuit of metal to cover positions has pushed TOCOM prices limit up
for more than two weeks running.
But neither the reduction to 50 from 80 yen per gramme, nor the following cut to 20 from 50 did
more than effectively shut down trading.
And traders said the exchange was playing with fire by changing the rules in the middle of the game
and might scare off legitimate customers, although they were clearly concerned about a squeeze in the
market.
Palladium is used in electronics, and 15 percent of demand is from dentistry, where the industry is
looking at substitutes. But 58 percent of world demand of 8.3 million ounces comes from car
manufacturers.
Car makers use anywhere from a couple of grammes of platinum group metals up to 15 grammes --
about half a troy ounce -- for catalysts in the large four-wheel-drive vehicles popular in North
America.
And palladium demand could well grow rapidly given legislation tightening emissions standards in the
major car markets of Europe, the United States and Japan over the next decade even as new car
sales accelerate.
Russia, the world's largest producer has failed to deliver palladium in the first six months of each year
since 1997 through bureaucratic red tape.
While it said recently that it would resume shipments soon, the market has been waiting to see the
material before it counts on it. |
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