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What is Causing the Drop in Palladium Prices?

When the year began, it seemed as if Palladium would continue hitting all-time highs due to limited global access. However, despite geopolitical tensions worsening between Russia and Ukraine, the palladium price has taken a major hit.

The most significant reason behind the price drop has to do with Covid-19’s effect on auto catalyst supply from China. 

How Is Palladium Tied To The Auto Industry?

If you are looking to invest in palladium, it is important to understand that the rarity of this precious metal is mostly driven by its high-grade industrial value, which is tied to the automotive industry.

As the Russia-Ukraine war began, Russia face global sanctions, and world supply and access to Palladium were subsequently threatened. Russia is the world's largest producer of the rare metal. However, the auto industry has also faced supply issues as China continues to impose restrictions that have halted the trade of automotive parts.

The Global Price Drop in Palladium

Concerning the global pandemic and geopolitical fallouts, the future of Palladium remains uncertain. In March, the palladium price increased to almost USD 3,000 per ounce. The spot price of palladium surged up 8.4% to USD 3,008.74 per ounce from the previous month. 

Palladium's price is highly sensitive for buyers of the metal (in particular the automotive industry), and the shortage of supply is of concern. As of the present, the price has dropped by almost 50%

Latest reports show that Chinese interference is one of the major reasons for the decline in platinum and palladium prices over the past month. As lockdown measures in China tighten and spread through the rest of the nation, further downward pressure on palladium will continue, and production of catalytic converters will continue at reduced levels.

How Covid-19 is Affecting the Palladium Price

The new widespread surge in Omicron infections in China has caused temporary disruptions for semiconductor manufacturers, which use palladium. In addition to the economic impact of strict lockdowns and trade restrictions, China's growth has also decelerated.

Commodity demand has been significantly hit by reduced manufacturing in China. As a result, the global supply of these mechanical parts from China is low as they cannot meet demand.


Lockdowns in China and geopolitical tensions have created a disruption in palladium supply on a global scale. As everything is tied to manufacturing, if the situations keep worsening, the demand for palladium will shift towards platinum. For clients keen to buy palladium or platinum, please visit