The palladium market was in surplus by 1.75 million ounces last year, a new report from Johnson Matthey has revealed.

The Platinum 2008 report indicated that demand for palladium had increased by 3.5 per cent to 6.84 million ounces with the autocatalyst, electronics and investment sectors all prospering.

While palladium production did not change much, sales of Russian state stock brought supplies to 8.59 million ounces.

Supplies rose by 8.0 per cent in 2007 with South Africa seeing increased sales from refined stocks, augmenting mine production to bring supplies up to 2.77 million ounces.

However, 2007 supplies were bolstered by 1.29 million ounces of shipments of Russian state stock in December 2006.

Demand for palladium in the autocatalyst industry has increased by 10.8 per cent to 4.45 million ounces in the last year with rising vehicle demand, particularly in China, helping to increase demand.

Palladium has also been used to replace platinum in some catalytic converters including diesel varieties.

The electronics industry has grown for the sixth consecutive year although it has remained below its peak, the report found.

Palladium's use in jewellery has dropped over the last year, falling to 740,000 oz.

Meanwhile, Johnson Matthey is expecting the price of palladium to follow that of platinum and gold as long as investor interest remains.

Source: JM PR