Norkel proposed to mint investment coins from platinum and palladium
Norilsk Nickel (MoEx: GMKN) suggested starting to mint investment coins from platinum and palladium in order to support the demand for platinoids and their processing in the domestic market. In terms of growth in prices, platinoids are lagging behind other precious metals, primarily gold. Given the stagnation of demand, the future profitability of many manufacturers is in question.
Metals of the platinum group (MPG, Platinum and Palladium) have not yet reacted to the rally of prices in the precious metals market, which puts many of their manufacturers on the facet of profitability. This was announced on February 28 by the director of the Norilsk Nickel marketing department Denis Sharypin at the session « The Russian Precious Metal Market – Development Strategy for 2025 » as part of the annual meeting with the leadership of the Bank of Russia, organized by the Association of Banks of Russia. According to the London Metal Exchange (LME) on Friday evening, the cost of gold was $ 2860 per troika ounce – almost 40% more than a year earlier. At the same time, the price of platinum over the same period increased by only 6.4%, to $ 940 per ounce, and Palladium ounces fell by 3.6%, to $ 914.5.
Platinum forecasts for 2025, published by the London Association of the Dragmental Market, suggest a moderate increase in prices. The average price is expected at $ 1021.64, which is only slightly higher than last year. ICBC Standard Bank and UBS expect a higher price ($ 1100), while Capital Economics give a more pessimistic forecast of $ 920. “The main reason for the restrained forecasts is the expectation of advanced growth of supply, without significant changes in the industrial use of metal,” explains Sergey Frolov, managing partner of NEFT Research. “The current price level is already critical for most South African manufacturers,” notes Ahmed Aliyev BCC Analyst the BCS World Investment. “Some of the companies are now working at the expense of a previously accumulated cash pillow.” At the same time, the platinum market has been in short supply since 2023, Palladium since 2019, the expert emphasizes. Norilsk Nickel has been supported by the low cost of production in the profitability zone, the experts surveyed admit.
Norilsk Nickel is the world's largest Palladium manufacturer, it accounts for 43% of the world production of this metal, as well as 12% of world production of platinum. This year, the company does not predict the growth of the production of these metals, since “demand is expected to stagnate if there is no significant acceleration as a reaction to the reduction of interest rates in the Western world and the economy support measures in China”. The financial indicators of Norilsk Nickel, according to the results of last year, decreased to many years of minimums – revenue by 13%, to $ 12.5 billion, net profit – by 37%, to $ 1.8 billion (see Kommersant on February 10).
From the presentation of Denis Sharypin, it follows that The consumption of Palladium by the Russian industry is ten times lower than its production in the country, while, for example, in the USA the situation is opposite. So, data in Norilsk Nickel, in Russia, consumes 1 ton of primary palladium and 2 tons of secondary, while the export potential is more than 100 tons. The surplus in the domestic market is aggravated by the fact that export today is difficult for Russian Palladium. Despite the lack of direct sanctions restrictions on Russian Palladium, international counterparties are afraid to interact with him, the industry participants acknowledge.
As an operational measure, Mr. Sharypin proposed to start a minting of investment coins from platinum and palladium in Russia in order to stimulate at least investment demand for metals. However, Analysts interviewed by Kommersant doubt that MPG will really be able to compete with gold as an investment product. This is partly confirmed by the weak interest of investors in the MPG bidding on the exchange (see Kommersant on October 23, 2024).
For long -term investors, platinum can serve as a diversification tool, but no significant increase in prices is expected in the near future, says Sergey Frolov. It does not imply a significant increase in consumption in industry. “Platinum remains an important element in the automotive industry, especially in the production of catalytic neutralizers, but the development of the electric vehicle and competition with palladium can adversely affect demand,” the expert notes. “Other industries, such as medicine and jewelry sphere, also use Platin, but investment activity in Russia in these areas remains low.”
