Everything you need to know about the commodity palladium

Palladium is the element with atomic number 46 and has the chemical symbol Pd. It is called after the asteroid Pallas. Palladium, Platinum, ruthenium, iridium, osmium and rhodium are part of the group of elements referred to as the platinum group metals (PGMs). The elements in these group have similar properties like outstanding catalytic and resistant qualities . The unique properties of the PGMs have caused their widespread use: over 25% of all goods produced today contain PGMs or have PGMs play a large role in the manufacturing process. Over half the world’s supply of the commodity palladium are used for catalytic converters, which convert environmentally harmful gases from cars into more benign substances.
Deposits of palladium ore are rare: the most abundant sites are located in specific parts of South Africa, Russia, Canada and the Unites States. A sizeable source of palladium is the recycling of scrapped catalytic converters.

The history of palladium

The discovery of palladium was made by William Hyde Wollaston in 1802. He extracted enough of the element and tried to sell it, without naming himself, in a small store in 1803. At first a lot of criticism surfaced, claiming that palladium was an alloy of platinum and mercury. Wollaston offered a reward for anyone who could produce this so-called palladium alloy, but no one succeeded, proofing in a way that the palladium extract was genuine. Wollaston disclosed that he was the discoverer of the element in a publication in 1805. The name palladium was coined by Wollaston in 1802 after the asteroid Pallas, which was seen for the first time only two years earlier.

As a treatment for tuberculosis, palladium chloride used to be prescribed for people with a dose of one milligram per kilogram of body weight per day. It had many negative side-effects and was replaced by more effective medication.

In the years leading up to the millennium, the Russian supply of palladium to the world was delayed and cancelled a number of times. Panic broke out on the market for palladium and the price was driven to an all-time high. Ford Motor Company, who used a lot of palladium for their car production, feared a shortage and stockpiled enormous amounts. When the price of palladium fell in 2001, Ford lost almost one billion US dollars.

The making of the commodity palladium

The making of palladium is a process which involves a number of steps.

1. Mining

Though palladium can be found in deposits alloyed with gold and platinum, the commercial production of palladium starts with nickelcopper deposits found in Canada and South Africa. The large amount of nickel-copper ore that is processed makes the extraction of palladium profitable despite its low concentration.

2. Production

The production of palladium starts usually from the residue of the production of another metal, typically nickel. The chemical differences between the metals in this residue is used to separate them.

The first step is dissolving the residue in aqua regia, which will allow all the metals to form their nitrates. If silver is present, it is separated by forming silver chloride. By adding different kinds of elements to the mixture, eventually all the elements are separated. Rhodium sulfate, ruthenium, osmium, palladium and others are extracted from the residue and compiled for commercial usage.

3. Fission products

Large amount of the three lighter PGM’s, rhodium, ruthenium and palladium, are formed as products in nuclear reactors. As prices and global demand increase, production of noble metals in this way is emerging as a viable alternative source. Possibilities have been successfully researched on recovering metals from spent nuclear waste.

Applications of palladium

Palladium is being used in a number of different applications, which are listed below.

1. Catalysis

A versatile catalyst is formed when palladium is finely divided on carbon. As a catalyst, it can speed up (de)hydrogenation and petroleum cracking. Palladium, dispersed on a conductive material, also proves to be a very good electro catalyst to oxidize primary alcohols. As a homogeneous catalyst, palladium can be used for highly selective chemical transformations.

2. Jewelry

As a precious metal, palladium has been used in jewelry since the 1930s as an alternative to platinum for making white gold, because of its naturally, white color. It is much lighter than platinum and similarly to gold, palladium can be made into a 100 nm thin form.
White gold is made as an alloy of gold with usually one of three metals: nickel, silver and palladium. The alloy of palladium and gold is more expensive than nickel and gold, but seldom causes an allergic reaction.

In recent years, palladium has been used as the principal metal in jewelry, because of the relative rise in price of gold and platinum. Especially China began fabricating significant amount of palladium jewelry and although the relative decline of the price of platinum has lowered, production still totaled 17.4 tons in 2009.

3. Electronics

One of the biggest applications of palladium in electronics is in the production of capacitors. For these applications, palladium is used as an electrode. Connector plating in consumer electronics also require amounts of palladium, which sometimes is alloyed with nickel.

Trading of the commodity palladium

Palladium trading takes place on both the New York Mercantile Exchange (NYMEX) and the Tokyo Commodity Exchange (TOCOM). In contrary to many other metals, palladium is thus not available on the London Metal Exchange (LME).
A benchmark price for this metal is set twice a day in London, called the “London Platinum Quotation”. This price is set by the London Platinum and Palladium Market (LPPM), which bases its price on the direct trading activities on their platform.

Price factors

The price of palladium is discovered through the supply and demand of this metal. Although palladium is considered a precious metal, its price is influenced mainly by its demand in the automobile industry. Therefore monitoring expectations for this industry can prove a significant indicator for future palladium prices.

The supply also plays a major role in its price discovery as a large quantity of the metal is produced in South-Africa, where it is produced cheaper in contrast to the dollar in which it is eventually priced.

NYMEX palladium futures contract

A Palladium Futures Contract on the New York Mercantile Exchange (NYMEX) has the following specifications:


Product SymbolPA
Contract Size100 troy ounces
Price QuotationU.S. Dollars and Cents per troy ounce
Contract MonthsMarch, June, September, and December
Tick Size$0.05 per troy ounce