Investment case
After a narrowing deficit in 2018, the palladium market is expected to post a widening and significant deficit this year, to the tune of one million oz, according to Johnson Matthey.
While this projected deficit assumes a strong growth in Chinese automotive demand, we believe that the recent trends in car production in China pose downside risks to the outlook for automotive demand.
Nevertheless, even more conservative growth for Chinese automotive demand would leave the palladium market into a deficit, which would be larger than the 2018 deficit.
This is therefore our view