Substitution still missing in Macedonia

September’s Macedonian trade data is out, important for PGM market participants as it is the best way I can come up with to track whether super-expensive palladium is being substituted out of the diesel catalysts for cheaper platinum 1.

So far there has been no evidence of such substitution, indeed the palladium ratio of the two metals has actually trended higher through most of this year.

September was a little different. Imports of both metals plunged, but because palladium fell more sharply, the implied ratio did move in platinum’s favour, to 36% by weight, compared to 44% in August’s data.

Source: UN comtrade, Matthew Turner, November 2019

But it’s way too soon to read anything into this. 36% is actually the six-month average, and higher than seen in many months this year.

The sharp fall in imports of both metals is quite interesting. It seems unlikely there is going to be sharp fall in output so one suggestion that comes to mind is metal was being stockpiled ahead of potentially disruptive “no-deal” Brexit (the metal comes from the UK), though that is guesswork.

What is clear is the imported price of palladium is rising fast. In September it was $1,570/oz, the highest on record. That corresponds to the market price in the first part of the month – October’s was much higher.


  1. For details of why this is the case, which in short because Macedonia’s main importer is a huge JM catalyst factory, see here

Still evidence of no palladium substitution

I wrote two weeks ago (“No evidence of substitution away from palladium. Indeed, evidence of no substitution“) that a natural experiment – North Macedonia trade data – could tell us whether high-priced palladium was being replaced by cheaper platinum in diesel autocatalysts.

Answer: it wasn’t and that was a good reason to think the price of palladium could go higher. And indeed it has gone higher, now nearing $1,800/oz.

We now have North Macedonia trade data for August. Does this show any shift towards platinum? Nope. Palladium was 44% of the palladium & platinum imported, higher than the YTD average of 36%. This reinforces the point that 2019 is on course to see palladium’s share rise not fall.

European EV sales in September super strong

After a few months of a weakening trend, European electric vehicle (EV) sales in September roared (or maybe whined?) back, up a remarkable 75% YoY, led by a 112% gain in pure EVs (BEV) and with even plug-in hybrids (PHEVs) higher YoY.

I estimate total EV sales in the region were just under 58k, nearly matching the highest month in history, March 2019.

Source: European car association data, Matthew Turner, September 2019

What was behind this performance? That it was nearly a record month is partly sign of the market maturing. March & September are traditionally the strongest month for all new car sales in Europe, with number plate changes (particularly in the UK). It now looks like buyers are waiting for these number plates to get EVs too. The YoY acceleration is more interesting. Partly this was because it was a strong month anyway for all new car sales after a weak September 2018 on emissions changes – up 12% YoY on my estimates. Specifically, however, the roll out of Tesla’s Model 3 to Europe continues to have an outsized impact on EV’s market share.